Experimental feature

Listen to this article

Experimental feature

A Nobel Prize-winning economist has endorsed Alex Salmond’s currency plans for an independent Scotland just hours before a potentially crucial debate between the Scottish first minister and the leader of the pro-union campaign.

Joseph Stiglitz told an audience at the Edinburgh International Book Festival that the three main UK parties were “for the most part” bluffing when they ruled out Scottish National party calls for a post-independence currency union – and Scotland could still prosper even if it had to use sterling without a formal pact or to establish its own currency.

“There are many currency arrangements that can work,” said the US economist, an adviser to the Scottish government. “I think this is a lot of to do about nothing.”

Mr Stiglitz’s comments offered useful ammunition to Mr Salmond ahead of the second, and likely last, televised debate of the referendum campaign against Alistair Darling, former chancellor and head of Better Together.

Mr Darling was widely seen as having won the first debate after he put heavy pressure on Mr Salmond to identify a currency “Plan B”. Mr Salmond later said he wished he had explained his stance “in more detail”.

With all credible opinion polls still showing a majority of voters likely to back remaining in the union on September 18, the Monday night BBC debate is a potentially vital opportunity for Yes supporters to build momentum for the last few weeks of campaigning.

Opinion polls suggest many voters in Scotland believe formal sharing of the pound would be likely, despite vocal rejection of the idea by all three main parties in Westminster. Carwyn Jones, the Labour first minister of Wales wrote in the Daily Record on Monday that he would “strongly oppose” a currency pact.

A number of economists and experts have weighed in on the currency question, with many arguing that none of the options available to an independent Scotland would be as good as remaining in the UK.

But Yes campaigners highlight Mr Stiglitz’s status as an outsider in the debate and his credentials as a former chief economist of the World Bank and chairman of the Council of Economic Advisers to then US president Bill Clinton.

Mr Stiglitz said the main question for the referendum should not be about currency or how much oil was yet to be extracted from the North Sea, but about differing visions of society.

He cited approvingly Scottish enthusiasm for free higher education as a route to addressing inequality, and renewable energy to promote innovation and protect the environment.

In England politics was more in thrall to the financial sector and there was a tendency to “let the market drive everything”, he said.

Mr Stiglitz also defended the SNP’s threat to walk away from UK government debt if London refuses to share the pound and the Bank of England, saying it would be a “legitimate position”, because there had to be a fair division of assets and liabilities.

As the “continuing state” if Scotland becomes independent, the rest of the UK would be legally liable for all UK national debt, however, pro-union politicians say refusal by Scotland to take responsibility for its share would be tantamount to default.

Get alerts on Scottish Independence when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.

Follow the topics in this article