An independent Scotland faced '˜full-blown currency crisis'

Scotland would have suffered a 'full-blown currency crisis' becoming another Greece if the country had voted for independence according to an economics expert and university professor.

An independent Scotland would have become another Greece, says an expert. Picture: Jeff J Mitchell/Getty Images

In addition, due to the declining oil price the country would have faced an economic crash.

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These were the findings of Professor Ronald MacDonald, from Glasgow University, who raised concerns about the issue of currency, claiming it would have brought about “huge disruption to the Scottish economy, and of a magnitude similar to the recent financial crisis”.

He suggested that a formal or informal sterling zone arrangement post- independence implied a fixed exchange rate. However, with the oil industry struggling it would have led to “painful cuts” or a tax increase.

The professor of macroeconomics and international finance said: “Financial markets, knowing this was the only tenable option, would have massively speculated against the fixed exchange rate system, perhaps from day one of independence or before, creating a full-blown currency crisis with all of its attendant consequences.

“At the heart of the difficulty in designing a suitable exchange rate regime for an independent Scotland is I believe how the economy’s macroeconomic needs are balanced with ensuring residents north and south of the Border are not forced to be unwilling and unwitting currency speculators as a result of the many billions of pounds of cross border financial assets and liabilities between Scotland and the rest of the UK.”

The SNP pointed to the strength of Scotland in comparison to the rest of the UK and the threat of Brexit.

A spokeswoman for the party said: “Scotland’s economy is currently outperforming that of the UK, with faster economic growth, higher productivity and a stronger labour market. The whole point of independence is to allow Scotland to make better decisions that would make Scotland a fairer and more prosperous society.”

She added: “With the value of the pound plummeting every time the Prime Minister gives a speech on Europe, and with inflation increasing, real wages stagnating and family budgets being put under ever more pressure, it is clear Brexit is by far the biggest threat to Scotland’s economy.”