A recording of a conversation between Alex Salmond and George Osborne has been leaked* to The Spectator. An edited extract follows:

Alex Salmond: Scotland and England are different countries. So different, in fact, that we should no longer live together. Our interests have diverged and so must our futures.

George Osborne: I do not think that is the case. Nor, by the way, do I hope it is.

Alex Salmond: But it is!

George Osborne: [wearily] Perhaps you are right. Very well; if our interests and futures diverge then perhaps, as you suggest, present arrangements will no longer prove as satisfactory as once we thought they were.

Alex Salmond: I knew you would see the light.

George Osborne: Which is why I do not think it sensible, desirable or possible for us to maintain a currency union after independence.

Alex Salmond: Stop bullying me.

George Osborne: [leers] I am merely following your own logic, old boy.

Alex Salmond: You’re bluffing.

George Osborne: I assure you I am not. Why would I want to do that?

Alex Salmond: Because that’s what bluffers do. Besides, why do you want to make English businesses pay hundreds of millions of pounds in avoidable transaction costs?

George Osborne: Actually, it’s you that will force them to do that.

Alex Salmond: More bluster!

George Osborne: Because, in case you had not noticed, all this is your fault. In any case we export more to the United States than to Scotland and no-one, not even you, proposes we should all use the dollar. Though fairness demands I acknowledge that using the dollar remains one of the options within your “range”. So perhaps you can have a fourth preferred currency position…

Alex Salmond: Bigot.

George Osborne: Hear me out…

Alex Salmond: Tory bigot.

George Osborne: Independence is your idea, not mine. It has consequences. For us as well as for you. Some of those may be regrettable, some may involve additional costs. So be it. Prudence – remember her? – demands we pay attention to our insurance policies, however…

Alex Salmond: What gives you the right…

George Osborne: I neither need nor will seek permission to act in the best interests of English and Welsh and Northern Irish citizens. You’re neither my problem nor my concern now.

Alex Salmond: Mercifully. No more Tory rule!

George Osborne:  Once you’ve calmed down, perhaps you will thank me…

Alex Salmond: Not until hell freezes over or, even less likely, Hibernian win the Scottish Cup again…

George Osborne: I thought you wished to have nothing to do with a Conservative government in London?

Alex Salmond: Obviously not.

George Osborne: Then, Jocko, you shouldn’t want a currency union after you’ve “won” your “independence”. Let me explain it to you. Because a monetary union will necessitate a banking union which in turn demands a fiscal union. Which means your freedom to set your own budget will be sharply curtailed. You will have your liberty but it will be a constrained liberty subject to Westminster supervision. Which means, in the end, that your margin for manoevre will often be determined by a Conservative government in London. We will hold the purse strings. You would have a Tory government after all. Informally, it is true, but still, you know, with some power to influence you. Moreover, if what you allege is true and UK government policy ignores Scotland and favours the south of England then, you know, perhaps you should establish your own currency and central bank and run your own monetary and fiscal policy? Just an idea, old boy.

Alex Salmond: This is preposterous. Another bluff. More bluster. Bullying.

George Osborne: Are you suggesting the people are not ready for independence? Surely you can’t actually be scared of these things? Well I never…

Alex Salmond: [silence]

George Osborne Life’s a bitch, ain’t it? Especially [sniggers] in Linlithgow, eh?

Alex Salmond: [ruefully] It’s only a flesh wound

*If you believe that then, well, you should as the Irish say cop on to yourself.

Tags: Alex Salmond, british politics, George Osborne, Scotland, Scottish independence, sterling