Sturgeon hammer blow: Indy Scotland may need to BEG IMF for help – devastating new report
Brexit: Wilson shares plan for Scottish independence after exit
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SNP policy plans to use the pound sterling in an independent Scotland were also torn apart in a new report. The policy, outlined in the SNP’s Sustainable Growth Commission, said Scotland would use the pound sterling as a “temporary step before a Scottish currency is created.”
But economists have played down the idea in a devastating new report by pro-Union think tank These Islands.
Dame Deanne Julius, a founding member of the Bank of England’s monetary policy committee, said it was a “hugely risky experiment for Scotland.”
She said: “The evidence one could look to for this kind of arrangement are places that are quite different and at a different development level – places like Argentina – and it’s impossible, I think, to find any place that is a success story undertaking this route of political independence using a currency issued by another country.”
Professor Jeffrey Frankel, who served on the US President’s Council of Economic Advisers during the Clinton administration, said: “I think Scotland would have to undergo a profound change and would probably have to make some difficult economic adjustments.”
Professor Cédric Tille, member of the Bank Council of the Swiss National Bank, warned Scotland could really struggle independently and be forced to seek international financial help.
He said: “Looking at the massive Scottish fiscal and current account deficits, my advice to the new prime minister, should the country split off, would be to address these structural challenges or develop good links with the IMF, because she or he might well need their assistance in the future.”
St Andrews University’s Professor Alan Sutherland warned the method which he branded “sterlingisation” could have serious implications on a future Scottish banking system.
He said: “Some borrowers will just not get mortgages anymore, some businesses will not get loans, rates of interest will be much higher.”
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Kevin Hague, Chairman at These Islands, said: “These warnings come from some of the world’s most respected macroeconomics and currency experts.
“It should be a wake-up call to anyone inclined to believe the argument that leaving the UK’s currency area can be achieved at no risk.”
Concerns have previously been raised over Scotland’s economic sustainability as an independent country after the latest Government Expenditure and Revenue Scotland (Gers) figures showed Scottish spending amounted to £15.1billion more than ministers received in revenues.
Analysis by academics at the London School of Economics’ Centre for Economic Performance also suggested independence could hit Scotland’s economy up to three times harder than Brexit.
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But in response, Keith Brown MSP, SNP deputy leader, said: “Scotland will continue to use the pound at the point of independence, establishing an independent Scottish currency as soon as practicable through a careful, managed and responsible transition.
“Scotland is a prosperous and successful nation but we can do so much more by matching the success of other similar-sized independent countries which enjoy control of their own economic policy.”
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