A SENIOR group of economists are to recommend to SNP ministers that they put in place “precautions” after independence, limiting excessive spending and borrowing to demonstrate the country runs a tight ship capable of steering clear of a Greek-style debt spiral.
In a sign of the financial discipline required of the country if it votes Yes in 2014, the independent Fiscal Commission will report back early next year arguing that it should put in place clear firewalls to demonstrate it could withstand external shocks.
The group, commissioned by Alex Salmond earlier this year and including Nobel Laureate Joseph Stiglitz, will also back measures to guard against “lax” financial regulation of the sort that allowed banks over the past decade to take reckless risks with depositors’ cash.
It will also assess efforts to boost tax collection, amid growing anger across the UK about the tactics of tax evasion and avoidance, known to cost billions to the British economy.
The high-level group is to make full recommendations early next year, but its call is being seen as a key effort to show a new independent government could be build on solid foundations.
But the call for a fiscal discipline could set ministers on a collision course with left-wing independence supporters, who say independence should usher in more radical tax and spend measures, likely to be ruled out by any constraints on spending.
Speaking for the first time about the commission’s work, the former Scottish Enterprise chief Crawford Beveridge said: “Our concern has been with ensuring any system put in place is one that takes logical precautions against the problems of excessive indebtedness, poor fiscal controls and lax regulation that caused many of the problems the global economy now faces.”
He added: “At the same time we want to ensure in any future system Scotland learns from the best examples in areas such as efficient tax collection or fiscal responsibility.”
The discussions of the setting up of a stringent fiscal system come with growing scrutiny over SNP plans, with finance secretary John Swinney set to be questioned by a House of Lords Committee this week on the subject.
The new country would take its share of UK national debt, and – like the UK –would rely on borrowing to maintain current spending.
SNP ministers have sought to calm concerns of financial uncertainty by pledging to keep the pound, and use the Bank of England as lender of last resort.
However, Freedom of Information requests by this newspaper show there has been no correspondence between the Scottish Government and the UK Treasury on how monetary arrangements would work if Scotland votes Yes to independence in two years’ time.
The Fiscal Commission is made up of Beveridge and leading economists Professors Andrew Hughes Hallett, Sir Jim Mirrlees, Frances Ruane and Stiglitz.
Beveridge added that regulation, tax systems and policy options will also be examined by the commission before the referendum in 2014.