“John Kay, former economic adviser to Scottish Government, warns there is a real possibility that a premature introduction of a Scottish currency would be an embarrassing fiasco, ignored by most of the world” – Sunday Times, 12 June, 2022.


There are many prominent specialists in currency questions who recommend Scotland has its own money, including Richard Murphy, Ronald MacDonald and Mark Blyth. Why are they not quoted as well?


Edinburgh-born pro-market economist Sir John Kay was appointed first director of the Said Business School at Oxford University but resigned after only two years when students and dons protested that the new school was being funded by a £20 million donation from a Syrian arms dealer, Wafic Said.

Kay has acted as an adviser to both the Conservative and SNP governments as well as serving on the boards of various banks and investment companies. Kay was knighted for services to banking and business in 2021.

In 2011, while serving on Alex Salmond’s newly-created Council of Economic Advisers, Kay was widely reported in the media as saying that “Scotland would gain little by full independence”. He warned that independence might lead Scotland “to sink into the partisan petty corruption that, for so long, characterised Scottish politics”. He also claimed that offshore wind power was “inherently unprofitable”.

Following the Brexit vote in 2016, Kay wrote in the Financial Times that he now thought Scottish independence was likely in his lifetime but added “whether it is desirable is another matter altogether”. It might be safe to say that Kay remains a sceptic regarding independence.

The National:


Kay's views on currency, represented by the Sunday Times as an “exclusive”, are not new. Last December, on his personal website ( he wrote a very lengthy and technical article suggesting it would be wrong for an indy Scotland to move away from sterling.

He again praised the SNP’s 2018 Sustainable Growth Report, penned by Andrew Wilson, for arguing to keep the pound unless very significant conditions were met over the long term. These chiefly require the Scottish Government to eliminate the budget deficit, prove it is fiscally “responsible” and ensure any currency change is supported by business and the financial sector.

Kay’s main point is that current business contracts, mortgages and pensions are paid legally in sterling. Introducing a new Scottish currency would not change that and so is, effectively, irrelevant. In Kay’s view, if an independent Scotland attempted to impose legislation to make foreign banks or companies convert existing contracts to a new Scottish currency, they would either ignore the injunction or stop doing business with Scotland, or resort to legal action.

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Kay repeats these points in the Sunday Times. He also adds that, post-Covid, an independent Scotland would likely inherit a significant public debt – he mentions the figure of £180 billion – and be forced to borrow around £20bn each year to service this debt. If so, this would place a crushing burden on the public finances and lead to spending cuts and higher taxes.

Based on the conditions laid down in the Growth Report, that would see the adoption of a new currency postponed into the indefinite future.


Kay’s support for keeping the UK pound is not supported by other respected economists including Richard Murphy, professor of accounting practice at the University of Sheffield Accounting School. Murphy has written extensively in reply to the sorts of arguments put forward by Kay – see In particular, Murphy has researched the legal and technical issues behind converting existing sterling denominated obligations into the new Scottish currency.

Basically, as individuals and companies in Scotland would be obliged to pay taxes and public charges in the new currency, they would be obliged to convert their sterling balances into new money.

Companies would of necessity convert to paying wages and obligations in the Scottish currency. All this would mean buying Scottish pounds from a new Central Bank using old sterling accounts, instantly providing the Scottish financial authorities with sterling reserves.

There is also Ronald MacDonald, research professor in international finance at Glasgow University. He is ranked consistently among the world’s top 1% of economists and is a noted specialist in currency issues (unlike Kay).

The National: MONEY WORRIES: The question of a Scots currency in the vent of independence is again up for discussion.

Writing just before the 2014 referendum, MacDonald argued: “The economics of exchange rates clearly indicates that a sterling monetary union [between independent Scotland and rUK] is not a runner”. He went on: “This then leaves a separate currency as the only viable economic option for an independent Scotland”.

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And again: “There is only one currency option that the economics of currencies suggests will be credible to financial markets and that is an independent currency”. (Centre on Constitutional Change, February 2014.) Then there is Dundee-born Mark Blyth, the respected professor of international economics at Brown University in America. Blyth is the author of “Austerity: The History of a Dangerous Idea”. He became a public convert to Scottish independence in 2020, recommending that Scotland “goes it alone” rather than stay tied to Britain’s “rapidly imploding” economic growth model.

Brown also came out in support of a Scottish currency. Blyth is not uncritical of the SNP government and has cited a lack of specific plans for the post-independence economy including dealing with any fiscal debt. He recommends running a budget surplus as a way of maintaining international confidence in the new currency.


There are many reputable and respected economists who support independence and a separate currency. As with Blyth, the Brexit vote has led previous economic sceptics on independence to change their minds.

The latest OECD report forecasts that the UK will have the lowest growth among the major industrial economies next year, with the exception of Russia. UK inflation is already the highest in the G7.

The Bank of England is responding by raising interest rates steeply, which is likely to plunge the UK into recession. Is this really the basis for an indy Scotland keeping the pound?


Kay rates 1/10 for laying out the issues. But his recommendation that Scotland remains tied monetarily and fiscally to the failed UK economic model after independence is suspect.