SCOTLAND should retain sterling as currency in the event of independence, according to the First Minister’s economic advisers.
Holding on to the pound “immediately” after a vote to leave the Union would also benefit the rest of the UK as a key trading partner, they conclude in a report due to be published in full today.
“In our view, it would be in Scotland’s interests to retain sterling immediately post-independence,” the report states. “It is also the case that, post independence, this would benefit the rest of the UK to maintain a key trading partner, as nearly 10 per cent of the existing UK economy, Scotland would remain one of the largest trading partners of the UK economy.
“There would be particular advantages for the UK in areas such as energy and financial services. Scotland’s economy is strong enough and sufficiently aligned with the rest of the UK that a separate currency would not be necessary.”
The future currency of Scotland, assuming a Yes vote in autumn 2014, has been questioned by supporters and opponents. Some argue it would have to adopt the euro as a consequence of gaining full EU statehood, while others have called for a new currency or retention of sterling.
The Scottish proposals follow work by First Minister Alex Salmond’s council of economic advisers, which brings together academics, including Nobel prize-winners.
Crawford Beveridge, chairman of the council’s fiscal commission working group, said the publication did not determine what path Scotland should take.
“Instead, the aim of the group is to use our expertise to provide advice and guidance to the government and to offer options for reform, should a vote for independence be forthcoming,” he said.
“The task was to design a robust macroeconomic framework for Scotland post-independence that delivers sustainable economic growth and a platform from which to tackle inequalities. By international standards, Scotland is a wealthy and productive country. In terms of output per capita, it is on a par with many other successful independent countries.
“The proposition the fiscal commission working group will put forward is a workable blend of autonomy, cohesion and continuity. It is a well-engineered model for day one of independence.”
The technical group includes professors Andrew Hughes Hallett, Sir James Mirrlees, Frances Ruane and Joseph E Stiglitz.