British government's austerity hurting economy - Swinney

The British government's focus on austerity has damaged the nation's economy, Scotland's finance minister said on Monday as he fleshed out some of his own economic plans under a possible fully-independent Scotland.

Scotland's devolved government, which has limited powers on spending and legislation, plans to hold a referendum on ending a 300-year union with England but it has been coy over some of the details of how it would run a self-governing country.

Key questions over monetary and fiscal policy, Scotland's financial services industry and the lucrative North Sea oil and gas industry remain unresolved.

John Swinney, the Scottish government's finance minister, accused British finance minister - or Chancellor of the Exchequer - George Osborne of using the euro zone debt crisis as an excuse for Britain's return to recession.

"Rather than seeking cover in the euro crisis the Chancellor should acknowledge that much of the responsibility for the lack of growth in the UK economy since the onset of recession back in 2008 lies at his own door," Swinney said in a speech in Glasgow.

"The Chancellor's approach has placed too much emphasis on austerity - and not enough on promoting growth. An approach which is clearly self defeating."

Swinney said he would favour the creation of a "sterling zone" to keep Scotland in monetary union with the rest of Britain.

Osborne has stood firm by his plans to reduce a record budget deficit, despite Britain falling back into recession this year, arguing that to loosen fiscal policy would put Britain at risk of being sucked into the euro zone crisis.

There has been some speculation that an independent Scotland may have to commit to adopting the euro as a prospective member of the European Union.

"Retaining the pound under independence is something that I believe is in the interests of Scotland, the rest of the UK and the stability of sterling itself," Swinney said.

Swinney told reporters that utility company Scottish Water would also "remain a company owned by the people of Scotland".

The Scottish National Party, the devolved government's ruling party, wants to hold the referendum in the autumn of 2014. But Britain's Conservative Party-led coalition government has pushed for an earlier vote, warning that any prolonged uncertainty would deter investors and harm the economy.

Opinion polls show that about a third of Scotland's 4 million voters want independence, with most opposed to it.