Nobel winner Stiglitz: Independent Scotland should have its own currency, avoid euro

Nobel Prize-winning economist Joseph E. Stiglitz © Christian Hartmann
Nobel Prize-winning economist Joseph Stiglitz has advised the Scottish National Party (SNP) to abandon the British pound and avoid joining the euro if Scotland wins independence.

Stiglitz, who sits on Scottish First Minister Nicola Sturgeon’s Council of Economic Advisers, has suggested Scotland create its own free-floating currency if it leaves the United Kingdom.

Such a move would enable Scotland to stimulate the economy and lower its growing deficit, he claimed in an interview with BBC Radio Scotland.

Official SNP policy during the Scottish independence campaign in 2014 was for Scotland to use the British pound as currency in the event of independence, a plan deemed impossible by then-Chancellor George Osborne.

They wanted to say that we could move from the current economic arrangement to another one while keeping our currency and keeping other forms of institutions. I think, in hindsight, that may have been a mistake,” Stiglitz said.

The Columbia University professor, who has advised Bill Clinton and Jeremy Corbyn, cited Iceland’s strong economic recovery after the 2008 crash as an example of what a country in control of its own currency can do.

He issued a strong warning against Scotland being “tethered” to a single currency by joining the euro.

If you were forced to join the euro as a price of joining the EU, then I would have very strong second thoughts,” he said.

It’s too high a price. Your economy should not be ruled by Frankfurt, which is what would happen if you had to join the euro.”

Stiglitz, who won the Nobel Prize for Economics in 2001, has recently published a book describing the euro a threat to the future of Europe.

Any change in policy on currency would be required ‎to go through the normal party processes – but we agree with Professor Stiglitz that we should not join the euro,” an SNP spokesman said.

However our immediate priority is exploring all possible means to protect Scotland’s place in Europe, in line with the way people here voted, which is vital for jobs, investment and long-term prosperity.”