Indy Scotland ‘ could need £ 300bn’ for new currency

A leading economist has warned a separate currency in an independent Scotland would need to be backed by billion sin foreign exchange reserves to protect it from economic shocks and speculators.

Professor Ronald MacDonald, research profess or of international finance at the University of Glasgow, said the reserves needed could be anywhere from £ 30 billion to £ 300bn – the latter figure held by Hong Kong, which fixes its currency’ s exchange rate to the US dollar. Norway has reserves of £ 30bn for its own free-floating currency.

Prof MacDonald said: “You are talking about a massive flip round from [Scotland having] a pretty large deficit to a surplus to start gathering these reserves. It implies massive spending cuts and/ or tax rises.”