THE economist behind a report on currency ‘buried’ by the Scottish Government’s junior partner has warned independence could cost households a fifth of their income.

Professor Ronald MacDonald said Nicola Sturgeon’s plan to keep using the pound for years after a Yes vote would fail as the financial markets would bring forward a currency crisis on "day one" of independence.

He said that would force a newly independent Scotland to adopt its own currency far faster than the First Minister has suggested, with a devaluation of 20 to 30 per cent likely.

“These are big numbers and they will affect peoples’ wages and they will affect peoples’ mortgages,” he said.

Last week it emerged the Scottish Greens had commissioned a report on currency options under independence from Prof MacDonald.

Delivered to the party in 2016, it was scathing about the SNP’s plan to keep using the pound informally - known as  sterlingisation - calling it “disastrous” and a route to “severe austerity”.

He said a new Scottish currency was therefore inevitable.

Despite the Scottish Greens wanting a new currency as soon as possible, the party never published the report, leading to claims it had buried it on the grounds it was unhelpful.

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The SNP want to keep the pound for an indefinite number of years after a Yes vote, only changing currency subject to a series of economic tests.

But on a new website,, which he has set up with pro-Union businessman and Tory donor Robert Kilgour, Prof MacDonald argues the SNP’s plan would not survive reality.

The professor of macroeconomics at the Adam Smith Business School at Glasgow University said Scotland would be forced to adopt a new independent currency immediately after independence, and that it would be worth 20-30% less than the pound. 

He said the introduction of a new Scottish currency would hike the cost of imports, increase debt costs and lead to higher interest rates. 

Households currently taking home £35,000 a year would see their spending power cut by the equivalent of £7,300, the analysis said. 

This is based on imported goods costing £4,300 extra, interest rate rises of £1,500 and existing sterling-denominated debts costing around £1,500 extra a year to repay.

The website includes a calculator suggesting how much people would lose, with only the highest of earners having more spending power under independence.  

Prof MacDonald said: “You’re talking in my view of a devaluation of between 20% to 30%. These are big numbers and they will affect peoples’ wages and they will affect peoples’ mortgages.”

“The key thing the SNP is not telling people is that financial markets bring events forward.

“The crisis will be brought forward to day one of independence.

"It’s obvious why they don’t want to talk about what will happen on day one of independence.” 

Mr Kilgour, founder of Scottish Business UK, said: “SBUK has been delighted to support Prof MacDonald’s important work because it sheds light on economic plans that carry real risk not just for individual households but for businesses across Scotland.” 

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Pamela Nash, chief executive of Scotland in Union, added: “There is a global cost-of-living crisis and people are worried about feeding their families and heating their homes.

“Instead of coming up with solutions, the SNP is only focused on making this even worse by cutting household spending power by a fifth.

“As this economist says, breaking away from the rest of the UK will only make life more challenging for hardworking families across Scotland.

“There’s never a good time for a household to take a financial hit of this nature, but especially not through a worldwide financial crisis.

“Scotland’s positive future is with the rest of the UK, ensuring we can all get through this period together.”

SNP MP Kirsty Blackman said only the full powers of independence would let Scotland “escape harmful Westminster control [and] long-term economic damage”.

She said: “As the cost of living crisis deepens, with households struggling with rising prices, higher mortgages and record levels of inflation, the Westminster Tory government has piled on the hardship with an extreme Brexit and making plans to impose austerity 2.0.”

A Scottish Government spokesperson said: “As set out in the economy paper, the powers of independence would enable the Scottish Government to replicate the success of many neighbouring countries, which are more prosperous, productive and fairer than the UK, and this would enable the Government to protect and support households across the country who are facing the growing cost-of-living crisis.

"Scotland would continue to use the pound on independence until it is judged that conditions are suitable for individuals and businesses to move to an independent Scottish currency.”