New Scottish currency ‘may see pensions slump by 30%’

SCOTS could see 30 per cent slashed from the value of their state pension under SNP plans for a new currency, a leading economist has warned.

The Nationalists’ plans, put to a vote at next month’s SNP conference, would see an independent Scotland ditch the pound and launch its own currency and central bank.

But that could spell disaster for people’s pensions, mortgages and shopping bills as Scotland has a larger notional deficit – between tax receipts and public spending – than the rest of the UK, and would be expected to take on a fair share of UK debt.

Professor Ronald MacDonald, an economics expert at Glasgow University, said an independent Scotland would not have the reserves to peg its new currency to an established one such as the British pound, and would have a ‘floating exchange rate’.

He estimates the new Scottish pound would slump in value by 30 per cent compared to the pound sterling.

Professor MacDonald said: ‘Anything denominated in the new Scots pound, say, would be worth less in value than before and quite possibly a lot less. So pensions would be a good example of that.

‘Furthermore, since we are a net importer from the rest of the UK and the rest of the world, prices of these goods would rise and inflation would be greater, so there would be a double whammy of financial assets worth less and the spending power of the pensions would be diminished.’

Yet mortgages held by banks would still be in pounds sterling, while prices in the shops would not fall due to the costs of imports, much of them from the rest of the UK.

Professor Graeme Roy, director of the Fraser of Allander Institute, said: ‘If you had a mortgage in sterling, then moved to a Scottish currency, the mortgage provider still wants the money in sterling.’

Nicola Sturgeon has said she will make a statement on Indyref 2 ‘within weeks’, but last night she was urged to rule out another referendum.

Scottish Conservative finance spokesman Murdo Fraser said: ‘The SNP’s economic blueprint for independence already proposes austerity on stilts and massive tax increases for hard-working Scots. It now appears that the new SNP currency would force up the price of your shopping and decimate pensions.’

‘Spending power would be diminished’