By Kathleen Nutt

Political Correspondent

THE crisis hitting sterling has triggered calls for the SNP to revise its currency plans and commit to joining the euro should Scotland become an independent country in the European Union.

Currently the party support an independent Scotland continuing to use the pound and to introduce its own currency once six economic tests have been met.

The policy was a key aspect of the SNP’s growth commission led by former MSP Andrew Wilson but has come under criticism in the party and wider independence movement with many activists in favour of a swifter move to a new currency.

Delegates at the SNP conference last November voted in favour of starting preparations to set up a central bank after independence in a move seen as challenging the leadership’s currency strategy.

Supporters of the resolution said continued use of the UK pound, an approach widely knows as “sterlingisation”, would deny an independent Scotland essential freedom of economic action and make its economy too dependent on the financial fortunes of the UK.

The calls for the SNP to revise its currency plans come after the value of the pound crashed to a 37 year low against the US dollar after the Chancellor delivered his mini Budget.

Turmoil intensified last week in response to Kwasi Kwarteng’s plans which promised a £60 billion spending package to help households and businesses with energy bills while announcing tax cuts.

On Wednesday the Bank of England was forced to intervene in the crisis to save pension schemes.

The costs of Government borrowing have also shot up, with the financial markets expecting the Bank to raise interest rates from 2.25 per cent now to around 6 per cent next year.

Following the crisis experts called for the SNP to review its plans over what currency Scotland should use if it becomes independent.

“I think the SNP should be reviewing their currency plans. Probably - since we’re talking some way off until independence day - they need different scenarios, one where they do keep the pound for a while and one where the go straight for a Scottish currency,” said EU expert Kirsty Hughes.

“Ideally, you would peg a Scottish currency to the euro but that would depend on having all the economic fundamentals right, decent reserves and a clear and rapid path to the EU, so probably you would have a floating currency to begin with.”

She added: “In the face of the current financial crisis created by the Tory government, it certainly points up that sterling is not necessarily the best place to start as a currency choice once independent. But in three or four years’ time that could look different and more stable.

“An independent Scotland joining the EU will have to commit to joining the euro at some point. And if it has sterling as its currency when it joins, it will need the EU to agree that and agree, presumably, a transition period before Scotland introduces its own currency.

“Obviously, if an independent Scotland were joining the EU now, with the UK in a full-blown financial crisis, the EU would not consider sterling a safe currency from an inflation or an exchange rate point of view, so having a separate Scottish currency would be desirable - being in sterling now would surely delay Scotland’s EU entry. But in three or four years time that should look different.”

“We don’t know where this crisis will end up but the very large increase in debt the UK government is taking on underlines the question of what would be a reasonable or fair portion of UK national debt for Scotland to take on.”

Anthony Salamone, who runs the Edinburgh-based consultancy European Merchants, said: “If Scotland became independent yet continued to use sterling for years (or decades), most EU decision-makers would surely be puzzled.

“They would likely question why Scotland had gone to the trouble of becoming a separate state if on currency – and perhaps other areas – it chose to remain integrated with the UK for an indefinite period.

“It would indeed be strange for an independent Scotland, as a relatively wealthy European state with a developed free-market economy, not to have its own currency – be that a Scottish currency or a currency union like the euro – beyond an initial introductory period if required.”

He added: “While it would take time to prepare for a Scottish currency, much of the preparatory work could take place during the transition to independence.

“That independence transition would probably take several years and, more to the point, it would not have an in-built expiration date. If Scotland needed more time to become ready for independence, including in relation to a currency, the transition could be prolonged provided all parties agreed.

“Scotland’s currency status would have implications for joining the EU. The entire EU accession process is based on the premise that the applicant state has its own national currency when it applies.

“If Scotland did have a currency, it would need to meet the relevant requirements in EU law. If it did not have a currency, it would need to secure some special arrangement with the EU.

“As part of that arrangement, Scotland would undoubtedly have to explain to the EU how and when it would establish its own currency.”

First Minister Nicola Sturgeon is planning to hold an independence referendum in October next year and in June launched a series of documents to update the arguments for independence since the 2014 vote.

The first, launched in June, was described as a scene setter and examined the economic performance of a number of small independent countries. The second paper examined democratic issues and independence.

But the Scottish Government has yet to bring out its updated prospectus on currency. Its plan ahead of the 2014 was to continue to use the pound in a currency union with the UK. However, the policy was seen by many to be flawed when the then Chancellor George Osborne said he wouldn't agree to it.

The Supreme Court will hear next month whether Holyrood has the power to hold an independence referendum without the UK Government's agreement.