Sturgeon adviser suggests call for independent Scotland to share the pound was a mistake

Scotland should consider creating its own currency instead, he said.

The economist, who sits on Nicola Sturgeon's Council of Economic Advisers, said that a new ‘Scottish pound’ could help stimulate the economy and reduce an independent Scotland’s budget deficit.

Scotland spent nearly £15 billion more than it generated last year, according to official figures.

Speaking on the BBC’s Good Morning Scotland, Mr Stiglitz said that Scottish ministers had wanted "the smoothest transition possible.

"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.

"It would be a mistake to join the euro, by the way, so what they would have needed to do, perhaps, was resurrect the Scottish pound and let it float.”

He said that one of the reasons that Iceland recovered well from the 2008 financial crisis "was because it had its own currency".

"If there was a Scottish pound floating, you could help stimulate the Scottish economy," he said.

"The deficit would come down to make it acceptable to joining the EU.”

He also predicted that the EU would be more willing in future to admit states which refuse to join 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."

Murdo Fraser , the Scottish Conservative shadow finance secretary, said: "Professor Stiglitz is the latest in a series of SNP advisers who now see the writing on the wall. Leaving the United Kingdom would have massive consequences and ditching our currency would be one of them. It's high time those at the top of the SNP now accepted the same and apologised for the way they misled people two years ago.

"There is a simple solution for the SNP on the currency. It's called the UK pound and most people in Scotland would like to keep it. The SNP needs to accept the result of the referendum two years ago and got on with the job of governing."

Scottish Labour leader Kezia Dugdale said: “Being part of the UK means we can use the pound and have access to the Bank of England in times of difficulty for our economy. That's a positive argument for remaining in the UK.”

An SNP spokesman said: “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.

 “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.”