The Sustainable Growth Commission, which recommends that an independent Scotland retain the pound as its currency until six key economic tests are met, highlighted the importance of productivity, population and inclusive growth in increasing GDP.
It argued that Scotland should seek to emulate the performance of successful small countries elsewhere in the world, such as Denmark, Finland and New Zealand. These economies were characterised by innovation, openness to migration and fair and progressive employment practices, it said.
In particular, the report stressed the critical role of inward migration in the Scottish economy, proposing to woo migrants with a package of tax incentives to reduce the cost of moving to Scotland and a new efficient, easy-to-use visa system.
Setting out a plan to balance Scotland’s public finances, the commission described the country’s projected deficit of 5.9% of GDP by 2021-22 as unsustainable, and set a target of reducing it to under 3% in the next five to ten years.
It also proposed that public debt be maintained at no more than 50% of GDP.
The commission’s recommendations included an analysis of inherited UK spending programmes in order to avoid duplication, and a comprehensive taxation review with the aim of maximising simplicity, neutrality and flexibility in the tax system.
It also called for an annual solidarity payment towards UK debt and shared commitments, a fund for future generations based on windfall revenues, and an extended remit for the Scottish Fiscal Commission.
Commission chair and former SNP MSP Andrew Wilson said there was “no pot of gold…at the foot of the independence rainbow”.
But he added: “There is a toolbox and using it will mean taking responsibility for choices that seek to create a stronger economy, sustainable public finances and a fairer society.
“Our public finances can be put right sustainably from the unsustainable position we inherit from the UK system at present. And we can do so in a way that continues to grow public spending while stewarding the growth position of the economy.”
The Fraser of Allander Institute, which carries out independent economic research, described the report as an important contribution to the debate around Scotland’s economic future.
“It outlines some of the opportunities for Scotland – particularly over the long term – but also highlights some tough choices in getting there,” it said.
“In this regard, whilst offering important insights for the Scottish Government, it also puts forward some significant challenges which ministers will now have to respond to.”
