Scotland politics

Scottish independence: Adviser Beveridge backs currency union plan

Pound coins Image copyright PA
Image caption Experts have been giving evidence to Holyrood's economy, energy and tourism committee

The head of the Scottish government's fiscal advice group has urged SNP ministers to stick with their planned monetary union under independence.

Crawford Beveridge said Chancellor George Osborne was not "serious" when he ruled out Scotland's pound-sharing plan with the rest of the UK.

His comments came during evidence to MSPs on Scotland's future.

Holyrood's economy committee also heard calls for an independent Scotland to start its own currency.

In the event of a "yes" vote in the 18 September independence referendum, the Scottish government has proposed keeping the pound as part of a formal currency union with the rest of the UK.

Mr Osborne, along with Liberal Democrat Chief Secretary to the Treasury Danny Alexander and Labour shadow chancellor Ed Balls, have said they could not recommend such a move.

The move came after the senior civil servant at the Treasury, Sir Nicholas Macpherson, said currency unions were "fraught with difficulty".

Scottish ministers have said their option made sense for both Scotland and the rest of the UK, but political opponents have called for a currency "Plan B".

Mr Beveridge, chairman of the Scottish government's fiscal commission, told MSPs: "I don't think any of us on the committee believe for a minute that the chancellor is serious.

"We warned in our report last year that, leading up to this, there was gong to be a lot of political statements, but in our opinion, economics will trump the politics in this and good heads will prevail if there happens to be a 'yes' vote."

Image copyright PA
Image caption The Institute for Fiscal Studies looked at an independent Scotland's economic outlook over the next five years

Mr Beveridge added: "We would not want to even talk about a Plan B at this stage of the game - I think we would say there are lots of options, but at this moment our strong advice would be, let's go down the path of recommending to the government that they stick with the monetary union.

"We will spend some time on the fiscal commission working group over the next few months trying to help the rest of the UK understand the very strong advantages there are to that and the strong disadvantages there would be if they decided to go against that."

However, Dr Angus Armstrong, of the National Institute of Economic and Social Research, told the parliament committee that the chancellor's position was "entirely rational".

'Associated risks'

He said: "The issue becomes, since that's been ruled out, what would be in an independent Scotland's best interests?

"Based on the aspiration, pointed out in the White Paper, to build a Scotland which reflects the values and aspirations of Scottish people, then I think you want to have something that allows you the policy levers to be able to do that.

"There is, in my view, only one option which allows you that full range and that would be your own currency."

Prof Jo Armstrong, an economist with the Centre for Public Policy for Regions at Glasgow University, told MSPs there were pros and cons for all Scotland's currency options.

"If I'm truly independent and I want full access to levers of power, I would want to try and make my own currency work," she said.

"That has got lots and lots or risks associated with it but it allows me to have absolutely full control of the fiscal levers, which is what an independent country would want."

The referendum will ask voters the yes/no question: "Should Scotland be an independent country?"

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