SNP admits its currency plan fell foul of EU rules

Government says plan demonstrates ‘thoroughness of preparations’

The Conservatives have accused the SNP of misleading the public by championing a currency and banking plan they knew would be rejected by Brussels.

A Scottish Government blueprint from 2014, which was published yesterday, revealed favoured options for an independent Scotland’s central banking system.

The Scottish Conservatives said the Nationalists were lauding a currency union and a shared central bank with the rest of the UK, as well as EU membership, while behind closed doors accepting the plans fell foul of the bloc’s rules.

The paper admits the EU would have to be convinced to bend the rules over Scotland not having its own central bank and concedes Brussels would want it to sign up to the aim of adopting the euro.

Tory MSP Murdo Fraser said: “At the same time as Nicola Sturgeon was confidently preaching that we could keep the pound and share the Bank of England’s functions, she knew the EU could ruin those plans.”

The civil servant proposals, which were released under freedom of information laws, involved the establishment of a Scottish Monetary Institute (SMI), which would employ up to 400 staff and cost about £50 million a year to run.

The plan was based on the SMI operating under the Bank of England, with the latter acting as the central bank within a currency union. That scenario has been repeatedly ruled out by UK ministers, but officials also floated the prospect of the SMI becoming a central bank in its own right.

As well as the running costs, the paper estimates a £60m outlay on consultancy fees, as well as millions of pounds for transition. The proposals estimate the running costs would be offset by a transfer of profits from the Bank of England after negotiations.

A spokeswoman for Finance Secretary Derek Mackay said the material shows the “thoroughness with which Scottish Government officials prepared for an independent Scotland ahead of the 2014 referendum”.

She added: “The entire basis of these papers is for arrangements for an independent Scotland continuing to use the pound, and no country can be compelled to join the euro, as the example of Sweden – which joined the EU 22 years ago and rejected the single currency in a referendum 14 years ago – proves.”