Scotland could end up “even worse than Greece” as a result of new powers being devolved to Holyrood through the Smith Commission, MSPs have been warned.
The economic consequences would leave the nation in a “malfunctioning monetary union” at risk of falling into a “permanent cycle of decline”, according to former Scotland Office economist Dr Jim Cuthbert.
The focus on new income tax raising powers to boost growth could see Scotland lose out because of the lack of high rate payers north of the Border, according to Professor John McLaren.
The proposals are at the heart of the Conservative, Labour, and Liberal Democrat election plans for Scotland – while the SNP is demanding the economic package should be beefed up.
The Smith Commission report set out proposals for new tax raising powers for Holyrood after the referendum No vote. But this could “seriously weaken” the ability to pool and share resources around the UK, Holyrood’s finance committee was told yesterday.
“Scotland could find itself in a position even worse than Greece where it’s in a monetary union with inadequate arrangements for fiscal transfers but without control of its own resources and its own economic policies,” Dr Cuthbert said.