Mark Carney Enters Scottish Vote Debate

By James Matthews, Scotland Correspondent

The Bank of England Governor is issuing a warning on the economic consequences of Scottish independence as he delivers an address on currency union.

Mark Carney has held talks with Scotland's First Minister Alex Salmond in Edinburgh, before his major speech on one of the key referendum battlegrounds.

Mr Salmond has told Sky News he does not regard it as interfering in the debate.

In a speech to the Scottish Council for Development and Industry, Mr Carney will address issues such as the financial structures and foundations that are required for a shared currency between foreign governments, as well as looking at the benefits.

:: Watch Mark Carney's speech live on television, on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.

A Bank of England spokesman has told Sky News Mr Carney does not plan to publicly endorse or oppose Scottish independence.

Rather, he intends to set out a "cold analysis" of the challenges presented by a currency union plan.

Mark Carney and Alex Salmond held talks before the speech

Mr Carney will also give a news conference during his visit. His comments will, inevitably, feed into the wider political debate.

A currency union is central to the Scottish constitutional discussion.

Scotland's First Minister has said that an independent Scotland could retain the pound as part of a "sterling zone", arguing that such an arrangement would be universally beneficial, given that Scotland is the second biggest trading partner of the rest of the United Kingdom.

Chancellor George Osborne has said, however, that such a scenario would be "unlikely" and he has threatened to veto any euro-style formal agreement.

After the private meeting this morning, Mr Salmond talked to Sky News about the currency union.

Developer Dan Macdonald said keeping a common currency "makes sense"

"We should put forward what is in the best interests of the Scottish people and it's for them to judge," he said.

"We think it's good for Scotland and the UK. We know it's popular in Scotland and England.

"We think UK ministers will do what the people what. Scotland wants to keep the pound and England wants us to keep the pound."

Mr Salmond also said Mr Carney had confirmed that the technical talks between the Bank and the Scottish Government would continue in the run-up to the referendum.

Looking ahead to Mr Carney's speech, Davide Mare of the University of Edinburgh has told Sky News that the Governor's recent testimony in the House of Lords suggested he would head north of the border with practicalities in mind, rather than politics. 

He said: "He's a man who is focusing on the problems arising from two countries sharing the same currency, such as monetary policy, having two different fiscal policies, having a banking union that can be led by different institutions.

"This is what he's thinking, not about an independent Scotland being part of Britain."

Scotland's business community, in particular, has a vested interest in the issue of a currency union.

Retailer Daniel Johnson said operating in two currencies would not work

Sky News spoke to two Edinburgh-based businessmen on the subject, one pro-independence and the other against it.

Daniel Johnson is a retailer who runs the Paper Tiger shop in Edinburgh's west end.

He said: "My main concern is that I don't want to be doing business in other currencies.

"Most of my suppliers are in the rest of the UK, the other suppliers are in Europe.

"When I pay a supplier in Europe, I get charged by the bank £15 for every payment I make.

"The other big issue I have is that prices change when you deal with different currencies - I don't want to be a currency speculator, I want to be a retailer. I want to be dealing in one currency."

Dan Macdonald, chief executive of Macdonald Estates property developers, is a supporter of Scottish independence.

On currency, he told Sky News that to question a currency union following any Scottish breakaway was simply scaremongering. 

He said: "I don't think George Osborne, or the whole of commerce that exists within the UK today, can afford to do anything else but retain a common currency.

"It just makes sense. It doesn't make any sort of sense to abandon that or to deviate from it.

"To suggest otherwise is to spread the fear factor."

:: Watch Sky News live on television, on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.

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