THE SNP has signalled a decisive shift away from its "land of milk and honey" vision of independence and towards a more warts and all case for leaving the UK, as it continues to prepare the ground for a second independence referendum.

In a radical departure from the rhetoric of the 2014 vote, a leading SNP MP admitted that going it alone would require "painful" budget cuts.

READ MORE: Scottish independence campaign Yes Scotland needs to be revived now, says former SNP leader Gordon Wilson

Loading article content

George Kerevan - who is part of a team considering new currency options for an independent Scotland - also warned the country's public assets would have to be sold off to prop up a new Scottish pound.

Presenting a new post-oil, post Brexit case for independence, he claimed "short term" economic pain would be the price for transforming Scotland into an economic powerhouse.

His comments came as SNP insiders revealed the party is poised to embark on its promised summer independence drive within the next few weeks.

In further signs an "indyref2" phoney war is gearing up, the party faced pressure from Dennis Canavan, the former chairman of the cross-party Yes Scotland campaign, to include other pro-independence groups in the initiative.

READ MORE: Scottish independence campaign Yes Scotland needs to be revived now, says former SNP leader Gordon Wilson

Meanwhile, comments by John Kerry, the US Secretary of State, were interpreted as an strong endorsement of the Union.

Speaking following meetings with Theresa May and Foreign Secretary Boris Johnson, he said he was reassured by the Prime Minister's commitment to the "precious bonds" between the UK's nations.

"The United States of America depends on a strong United Kingdom. And we mean united," he said.

Scottish Labour described Mr Kerevan's comments, in an article for the business and financial newspaper City AM, as "astounding" and called on the SNP to explain where the cuts would fall.

READ MORE: Scottish independence campaign Yes Scotland needs to be revived now, says former SNP leader Gordon Wilson

However, his vision could set the tone for a second independence referendum which First Minister Nicola Sturgeon believes is "highly likely" in the wake of Britain's vote to leave the EU.

The First Minister has promised to offer a "realistic and relevant" case for independence after a number of senior Nationalists publicly questioned the implausibly Utopian vision of the SNP's 2014 blueprint, the White Paper Scotland's Future.

In the last referendum, Scots were not convinced by the party's policy of sharing the UK pound - a move ruled out by the Treasury - and since 2014 the collapse of North Sea Revenues has severely weakened the country's public finances.

READ MORE: Scottish independence campaign Yes Scotland needs to be revived now, says former SNP leader Gordon Wilson

The latest official figures showed Scotland running a deficit of £14.9billion, proportionately twice as high as the UK's.

The gap is expected to widen further when the next set of national accounts is published on August 24.

Mr Kerevan acknowledged the difficulties in his analysis for the business and financial newspaper City AM.

On currency, he said creating a Scottish pound, pegged to the value of sterling, and setting up a central bank in place of the Bank of England, would be "perfectly possible".

However, he admitted raising the cash reserves to underpin the new currency would require "monetising" Scotland's inherited share of UK assets.

It would also require "fiscal consolidation" - spending cuts or tax rises - to reassure foreign exchange markets, he said.

"It would certainly be doable, but would require independent Scotland to cut its budget coat to fit its fiscal means," he wrote.

Mr Kerevan said the prize would be the ability to boost the economy by increasing productivity.

He failed to explain exactly how that might be achieved but cited the examples of Iceland, Norway, Sweden and Iceland as countries which "powered out" of

2009 global recession faster than the UK.

He also noted smaller countries "exhibit greater social solidarity when it comes to sharing any economic pain".

He concluded: "Scotland’s post-independence fiscal consolidation should take only five years (one parliamentary cycle), lifting her economy on to a high productivity, high growth path by shifting resources from consumption to investment.

"That’s painful in the immediate short term but will allow Scotland to escape the ball and chain of the UK’s endemic low productivity."

Echoing Ms Sturgeon, Mr Kerevan said a second independence referendum was likely unless Scotland could retain its links with the EU.

He said Brexit would help win over No voters, including the middle classes and "swathes of Scotland's business and financial community" to the Yes cause.

Scottish Labour MSP Jackie Baillie said: "At a time when our public services are already facing significant cuts, and more uncertainty with Brexit, it is astounding that a senior SNP MP would suggest making further cuts to Scotland’s budget. "George Kerevan and the SNP owe Scots an explanation of where these cuts will fall."

She added: "People across Scotland voted in overwhelming numbers to maintain our relationship with the EU and the UK.

"The focus and energy of the SNP and the Scottish Government should be on respecting both mandates of the people of Scotland."