Scotland would be forced to dump the pound for its own free-floating currency immediately after independence, the country’s most eminent macroeconomist has warned as he denounced the “poor” plans produced by both sides of an SNP battle over the issue.
Professor Ronald MacDonald, research professor of macroeconomics and international finance at Glasgow University’s Adam Smith Business School, said a separate currency not linked to sterling would be needed to pay off the country’s £16 billion balance of payments deficit.
It’s the reporting not the economist though. You don’t pay off balance of payments deficits. In fact, you can’t have balance of payments deficits because the balance of payments always balances.
I assume what is meant is that there will be a trade deficit and if in sterling then a certain difficulty in gaining the incoming investment to finance it. The solution to which is a decline in the currency so that investing looks better and imports are more expensive/exports cheaper. Which is why you need your own currency.
But you know, newspaper reports of economics….