A KEY architect of the pro-Union Calman proposals has backed the Scottish Government's view that sharing sterling makes sense for both Scotland and the rest of the UK in the event of independence.
Economist Anton Muscatelli in a submission to a Holyrood committee, states: "I endorse the view, expressed by the Scottish Government following the recommendations of the Fiscal Commission Working Group, that maintaining a sterling currency union between Scotland and the rest of the UK (RUK) would be advantageous to both countries after independence."
Professor Muscatelli stresses he is speaking as an economist rather than as Principal of Glasgow University, which is neutral on the constitutional debate.
He argues that two already-joined economies make for an ideal currency union, while transaction charges would be punitive on both sides, particularly for the RUK in paying for oil. He rejects as "fallacy" comparisons with the eurozone, saying trade and labour flows within the UK are not the same as those between continental countries.
Professor Muscatelli chaired the independent expert group which advised the Calman Commission, which was set up by the three anti-independence parties to produce proposals to extend devolution, currently being introduced under the 2012 Scotland Act.
Professor Muscatelli says an independent Scotland within a sterling zone could work. "With only two parties in the Sterling union, enforcement should be much more straightforward than in the eurozone with its complex governance structure," he said.
"However, even with a fiscal and debt rule, the RUK and Scottish government would have considerable freedom to pursue very different spending and taxation policies."
Marco Biagi, SNP member of Holyrood's Economy, Energy and Tourism Committee, said: "This common sense position from the highly respected Professor Anton Muscatelli is very welcome indeed.
"As he sets out a currency union is the sensible option for Scotland and for the rest of the UK."
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