‘Greece-style crisis’ looms under SNP’s currency plan

SCOTLAND would be plunged into a Greecestyle economic crisis under SNP currency plans, a government adviser has warned.

Richard Marsh said the SNP policy of using sterling without permission after independence, before setting up a new currency, could lead to turmoil.

But he said Scotland might be more likely to adopt the euro in a bid to apply for re-entry to the EU in the event of the break-up of the UK.

The SNP has said it is not in favour of a formal currency union with the rest of the UK, which would enable sterling to be used as official currency in Scotland.

The option was ruled out by then chancellor George Osborne ahead of the 2014 independence referendum.

Mr Marsh was a researcher for the SNP’s Growth Commission – which drew up its currency plans – and is a member of a Scottish Government expert economic group.

Last night, Scottish Tory finance spokesman Murdo Fraser said: ‘Nicola Sturgeon’s economic plans for a separate Scotland would spell disaster for workers, businesses and public services.

‘Those plans have now been rightly attacked by one of the SNP’s own advisers.

‘The SNP lost the currency argument in 2014 and is losing it again now. By far the most prosperous choice for Scotland to make is to reject Nicola Sturgeon’s demands for another referendum and vote the SNP out of office.’

Mr Marsh said: ‘No credible economist would advocate sterlingisation [using sterling informally] as the policy of choice for an independent Scotland. This would involve Scotland accepting monetary policy as set by the Bank of England, including interest rates. At present, the Bank of England takes Scotland’s economy into account when adjusting monetary policy.

‘It would no longer have to do this if Scotland opted to use the pound sterling outside a formal currency union.

‘The Greek and German economies provide a stark example of the need for monetary policy to reflect and support a nation’s economic prospects.

‘This is while Greece is part of a formal currency union [as a eurozone country] – so sterlingisation would be at best a “Greece minus” outcome.’

Commenting on the idea of using sterling without Treasury consent, Mr Marsh said that there were examples of using dollars among ‘micro states’ – but Scotland was ‘hardly comparable’. He added: ‘A small number of larger countries have also adopted the US dollar but this has usually been in response to an economic collapse, with dollarisation [informally using the dollar] used to curb inflation and promote economic stability.

‘These examples involve developing countries reliant on agriculture. By contrast,

Scotland has a highly developed economy, with a sophisticated financial services system and broad range of goods and services exported to international markets.

‘Sterlingisation should only be considered as an option of last resort and would still pose significant issues for Scotland’s economy.’

Mr Marsh suggested it was more likely that the government of an independent Scotland would seek to use the euro, even without being an EU member.

He said: ‘It’s difficult to see why a newly independent Scotland, with an ambition to re-join the EU, would seek to informally use sterling.’

He said that ‘if options of last resort are being considered, it may better to consider euroisation in the short term while a new Scottish currency is established’.

But he said the better option would be to establish a new Scottish currency ‘as early as possible or reach an agreement for a currency union’ with the Treasury.

Last night, an SNP spokesman said: ‘Scotland’s currency on day one of independence will be the pound. We support adopting an independent currency as soon as practicable – but only when it is in the interests of the Scottish economy to do so, and will be guided by the six tests outlined by the Growth Commission.

‘The Tories’ Brexit plans will hit the economy and jobs, while our plans are about growing the economy with a positive vision for an independent Scotland.’

‘It would spell disaster’ ‘An option of last resort’

IF Nicola Sturgeon had her way, Scotland would be plunged into yet more constitutional chaos within months of next week’s general election.

But if she is so keen on forcing us all to face that nightmare scenario, why do so many questions remain unanswered?

Well, as Chancellor Sajid Javid pointed out last week, it is mainly because Miss Sturgeon does not have very much in the way of a detailed plan.

And, as Richard Marsh – a key adviser to the Growth Commission – reveals today, the few proposals she does have simply will not work. Miss Sturgeon has claimed an independent Scotland could continue to use the pound before switching to a new currency – failing to mention that if she does succeed in rejoining the Eu, we would have to sign up to the euro.

But, without a formal currency union in some form, Mr Marsh has said the country faces being plunged into a Greece-style economic crisis. It is high time Miss Sturgeon was honest with the people of Scotland and outlined once and for all exactly what kind of country it is she hopes to build.

And whether that plan includes a period of austerity which would leave thousands of families facing a very difficult future.

SHIVERING on crowded platforms over the next four weeks, angry train passengers will be tempted to blame the Government for their predicament.

Why, they will ask, have ministers and South Western Railway failed so lamentably to avert the longest strike in uK railway history?

Was no compromise or mediation possible? The answer, of course, is no. The RMT union wants confrontation, not compromise.

It wants renationalisation and a Labour government bending to its whim.

But anyone who remembers the lingering death of British Rail knows what a terrible idea it would be. The problems of our railways certainly won’t be solved by a return to the dead hand of state control.

THE fact that record numbers of consumers are shopping around for the best and cheapest energy supplier may be bad news for the power giants, but it shows market competition is working well. under Labour, the free market would end. And with it, the ability to punish bad or overpriced service by voting with our feet.