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By Belinda Goldsmith
EDINBURGH, Feb 13 (Reuters) - Britain warned Scotland onThursday it would have to give up the pound if Scots voted toend the 307-year-old union with England, declaring the currencycould not be divided up "as if it were a CD collection" after amessy divorce.
In one of the boldest attempts yet to scuttle a Scottishnationalist bid to break the union, finance minister GeorgeOsborne bluntly warned Scots that secession would cost themdearly in jobs and business.
"If Scotland walks away from the UK, it walks away from theUK pound," Osborne told a group of about 200 business leaders ina hotel penthouse with a panoramic view over the Scottishcapital, Edinburgh.
Scottish First Minister Alex Salmond accused Osborne of"bluff, bluster and posturing", and said his words wouldbackfire on him as a Sept. 18 referendum approaches.
Refusing to be drawn on whether his toughened stance wouldantagonise some Scots, Osborne said Scots needed to be clear onthe facts before making their biggest decision in threecenturies.
"The pound isn't an asset to be divided up between twocountries after a break up as if it were a CD collection,"Osborne, Prime Minister David Cameron's closest ally, said.
"The evidence shows it wouldn't work. It would cost jobs andcost money and wouldn't provide economic security for Scotlandor for the rest of the UK," Osborne said, waving a new Treasuryanalysis setting out the risks.
The message was aimed at undermining the economic case forindependence and one of the Scottish National Party's (SNP) keyproposals - that an independent Scotland would keep the pound.
CURRENCY WAR?
It comes as opinion polls show separatists are still laggingsupporters of the union but that the gap is starting to narrow.
The debate has intensified in recent weeks with Bank ofEngland chief Mark Carney cautioning that a currency union wouldentail a surrender of some sovereignty. Cameron made a patrioticcase for unity last week which was dubbed a "love-bombing" bycommentators.
It is the first time the main parties in Westminster havelaunched a unified campaign against Scottish independence andOsborne stressed this meant a currency union was off the table,whoever held power after Britain's 2015 general election.
Nationalist leader Salmond raised accusations of bullyingagainst Osborne and the finance chief of Labour, Ed Balls, andDanny Alexander of the Liberal Democrats who also voicedopposition to Scotland sharing the pound.
He said refusing to let Scotland join a monetary union wouldbe damaging to the UK economy and a formal currency union was inthe best interests of both the UK and Scotland.
"This is a concerted bid by a Tory-led Westminsterestablishment to bully and intimidate but their efforts to claimownership of Sterling will backfire spectacularly," he said.
"The stance of any UK government will be very different theday after a Yes vote to the campaign rhetoric we are hearingnow."
Nationalists in Scotland, whose waters contain the EuropeanUnion's biggest reserves of oil and gas, want the Bank ofEngland to stay lender of last resort for financial institutionsbut have given no Plan B if not allowed to keep the pound.
One possible option would be for an independent Scotland tocontinue to use the pound in a similar way that Ecuador uses theU.S. dollar ahead of a possible entry into the European singlecurrency, the euro, at some later date.
The SNP has indicated that if London prevented a currencyunion, an independent Scotland could refuse to take on a shareof the UK's 1.2 trillion pounds ($1.99 trillion) of governmentdebt which Britain has promised to honour.
Salmond said all the debt accrued up to the point ofindependence belonged legally to the UK Treasury but Scotlandhas said it would meet a fair share of the costs of that debt.
"But assets and liabilities go hand in hand, and - contraryto the assertions today - sterling and the Bank of England areclearly shared UK assets," he said.
Osborne said the nationalist threat to walk away from itsshare of UK debt would mean punitively high interest rates foran independent Scotland and was an "empty threat".
"In that scenario, international lenders would look atScotland and see a fledgling country whose only credit historywas one gigantic default," Osborne said.
Whether the hard line on the currency will irk some of the20 percent or so of voters still undecided in polls was to beseen.
"For some people this stance on the currency gives claritybut for others it could be seen as antagonistic," said AlexSanderson, who works in a professional services company inEdinburgh and intends to vote against independence.
Polling expert John Curtice from Strathclyde University saidhe did not expect a major impact on the polls from this.
"It might put the SNP under some pressure but voters inScotland were already doubtful the monetary union would happenand I'm not convinced this will be a turning point," he said.
