SNP economic expert tells of failings in party plan for currency union

A NOBEL prizewinning adviser to Nicola Sturgeon has highlighted failings in the SNP plan to enter a currency union with Britain in the run-up to the independence referendum.

Joseph Stiglitz suggested that the proposal may have been a mistake and said Scotland should consider creating its own currency instead.

The economist, who sits on Nicola Sturgeon’s council of economic advisers, said that a new “Scottish pound” could help stimulate the economy and reduce an independent Scotland’s budget deficit.

Scotland spent nearly £15 billion more than it generated last year, according to official figures.

Mr Stiglitz said that Scottish ministers had wanted “the smoothest transition possible”. He added: “They wanted to say that we could move from the current economic arrangement to another one while keeping our currency and keeping other forms of institutions.

“I think, in hindsight, that may have been a mistake.

“It would be a mistake to join the euro, by the way, so what they would have needed to do, perhaps, was resurrect the Scottish pound and let it float.” He said that one of the reasons that Iceland recovered well from the 2008 financial crisis “was because it had its own currency”. He also predicted that the EU would be more willing in future to admit states which refuse to join the euro.

Murdo Fraser, the Scottish Conservative shadow finance secretary, said: “Professor Stiglitz is the latest in a series of SNP advisers who now see the writing on the wall. Leaving the United Kingdom would have massive consequences and ditching our currency would be one of them.”

Scottish Labour leader Kezia Dugdale said: “Being part of the UK means we can use the pound and have access to the Bank of England in times of difficulty for our economy.”

An SNP spokesman said: “Any change in policy on currency would be required to go through the normal party processes – but we agree with Professor Stiglitz that we should not join the euro.

“However, our immediate priority is exploring all possible means to protect Scotland’s place in Europe, in line with the way people here voted, which is vital for jobs, investment and long-term prosperity.”