Keeping pound has restrictions for Scottish independence

An independent Scotland is likely to be more constrained economically, suggests a new study.

The National Institute of Economic and Social Research believes that keeping the pound is the “sensible” option, but that a currency union will impede fiscal policy, reports the BBC.

The Scottish government used the report to back up its aim of keeping sterling, arguing that it will leave Scotland in a "healthier" position financially, adding that there is not an economic case for independence. The National Institute of Economic and Social Research, which is based in London, looked into both monetary and fiscal choices for Scotland were it to leave the union. At the moment, the Scottish

Scottish Finance Secretary John Swinney has made it clear that it is unlikely conditions will be right to join the euro for “some considerable time", but that there are strong benefits with Scotland keeping the pound, both for Scotland and the rest of the UK.

The report also argues that it is unlikely that the Bank of England will give ‘lender-of-last-resort facilities’ to institutions in Scotland, although it is something First Minister Alex Salmond has contended for. It adds that fiscal balances will be unstable due to Scotland’s reliance on oil, and that Scotland will be open to the risk of default.