SNP proposals for a separate Scotland to continue to use sterling were thrown into confusion today, after one of Alex Salmond’s most respected economic advisers criticised the idea.

Professor John Kay, who served on the SNP Government’s Council of Economic Advisers, warns today in the Financial Times that the implications of the policy might “cause people to start wondering what the point of independence was in the first place”.

His article points to examples of currency unions in Europe and warns that such models are ill-fitting to Scotland, and would require a “treaty with appropriate fiscal rules – although the Eurozone experience means that the world will in future take a sceptical view of similar arrangements”.

Scottish Labour’s Finance Spokesperson Ken Macintosh said:

"This significant intervention adds to the SNP’s misery on this issue.

"In the space of a few months, they have shifted from supporting the Euro, to demanding a totally separate currency, and now they claim they want to keep using sterling.

"Leaving aside the strict EU rules which require all new members to move to the Euro, this runs sharply against Scotland’s national interest. It places a dogmatic view of nationalism above the real test of what is best for our economy and our country.

"The UK isn’t a foreign country – it is our country too.

"But if Scotland separates from the UK, with the UK still setting our currency, interest rates, borrowing levels, fiscal rules and monetary policy, why on earth would that be better?

"In truth, it wouldn't, and it appears that under the SNP's plan, every option following separation would entail someone else setting fiscal policy for us.

"Too often the SNP are blinkered by their dislike of the United Kingdom, refusing to acknowledge the strength of working in partnership with our neighbours and the unique advantages that brings."

1 February 2012