Scottish flagKeeping the pound as the currency if Scotland became independent would be both "sensible" and an attractive choice for the rest of the UK, a group of leading economists has said.

Experts in the Fiscal Commission Working Group said Scotland was sufficiently large to have its own currency if the country opted to leave the UK in next year's independence referendum.


But the group - set up by Scottish First Minister Alex Salmond to provide advice on the economic challenges and opportunities the country would face after independence - conceded there would be a number of "practical challenges" linked to establishing a separate Scottish currency.

The Scottish Government has already said it would want to retain the pound if the country votes to end the 300-year-old union.

The Commission stated: "On day one of independence, the members of the Working Group agree that retaining sterling would be a sensible currency choice that would be attractive both to Scotland and the UK."

The group's report, published on Monday, highlighted the strength of business links between Scotland and the rest of the UK as one reason for retaining the pound in a "sterling zone".

Commission chair Crawford Beveridge said: "We're a very large part of the rest of the UK's trade. There's a great deal of flow between the rest of the UK and Scotland, in both directions. In an independent Scotland the earnings you would get from oil revenue and exports of whisky and other things would be useful for the sterling zone to have."

Mr Beveridge, a former chief executive of Scottish Enterprise, added that keeping the pound would help provide "the stability for businesses to understand you could continue to do business here and across the border between Scotland and England without any currency risk". He said: "The indications we've got so far, from the technical discussions that have gone on, seem to agree that's a sensible position."

The Fiscal Commission he chairs includes Professor Andrew Hughes Hallett, a professor of economics in both Scotland and the US who has acted as a consultant for the World Bank, the IMF and the UN amongst others, and Professor Sir James Mirrlees, a Noble Prize winner who is Professor Emeritus at Cambridge University.

Professor Joseph Stiglitz, a Nobel Prize-winning economist who was one of the US Council of Economic Advisers for a period during the Clinton administration, is also a member, along with Professor Frances Ruane, the Director of Ireland's Economic and Social Research Institute who was previously an Associate Professor of Economics at Trinity College, Dublin.