Nobel economist admits shared currency plan was ‘a mistake’

The Nobel prize-winning economist who advises the Scottish Government has branded the plan for an independent Scotland to share sterling, as put forward by the ‘Yes’ campaign before the 2014 independence referendum, a “mistake”.

Joseph Stiglitz, a professor at Columbia University in New York, is part of First Minster Nicola Sturgeon’s council of economic advisors, and advised Alex Salmond during his reign at the head of the SNP.

The academic said Scotland should have instead considered the alternative of a “Scottish pound”.

Mr Salmond, who was first minister at the time of the 2014 referendum, has himself called for a re-think of currency options for an independent Scotland, although Ms Sturgeon has insisted that “the pound is Scotland’s currency”.

While Mr Salmond has too said “sterling is the right currency” for Scotland, he has also acknowledged that the campaign for independence had been “gazumped” on the question of currency when the UK government categorically ruled-out a shared pound scenario.

Mr Stiglitz’s comments come as Ms Sturgeon described a re-run of the 2014 ‘Indyref’ vote as “highly likely” because of the UK’s vote in June to leave the European Union.

The decorated economist, who has also advised US President Bill Clinton and Labour leader Jeremy Corbyn, said a free-floating Scottish pound could be used to stimulate the economy and lower its significant deficit.

This month it was revealed that Scotland spent nearly £15 billion more than it generated last year – a 9.5 per cent deficit which outstrips crisis-hit Greece.

The 2001 Nobel prize winner for economics said: “The reason they wanted to link the economy to the pound was that they wanted the smoothest transition possible, they wanted to say we can move from the current economic arrangement while keeping our currency and keeping other 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 is perhaps to resurrect the Scottish pound, and let it float.

“Small countries can have their currency. Iceland had one of the deepest downturns in 2008 but had one of the strongest recoveries, because it had its own currency.”