An independent Scotland could be forced to implement bigger cuts to public spending and higher tax rises than the rest of the UK, a think-tank has warned.
The Institute for Fiscal Studies (IFS) said a Scottish Government briefing paper on independence out today "skirts around" the kind of tough spending choices a new state would face.
Nicola Sturgeon used a press conference at Bute House to insist a "stronger, fairer and more sustainable" economy was more likely with independence than remaining in the UK.
The paper laid out some plans around an independent Scotland’s currency, borders and more detail on a proposed £20 billion capital fund to be set up in the first decade after independence.
The IFS - an independent think-tank which scrutinises public policy - welcomed Sturgeon's commitment to “sound public finances”, ensuring this through “fiscal rules informed by international best practice”.
But it warned: "Scotland’s much higher levels of public spending and slightly lower levels of onshore tax revenues mean that it is highly likely an independent Scotland would need to make bigger cuts to public spending or bigger increases to taxes in the first decade following independence than the rest of the UK would need to."
David Phillips, associate director at the IFS, said: "The Scottish Government’s new paper on post-independence economic plans makes all the right noises on how the public finances would be managed, emphasising achieving fiscal sustainability.
"But, it skirts around what achieving sustainability would likely require in the first decade of an independent Scotland - bigger tax rises or spending cuts than the UK government will have to pursue.
"This is because while high oil and gas prices means Scotland’s underlying budget deficit this year will be fairly close to that of the UK as a whole, this is likely to prove temporary: oil and gas prices are expected to fall back, and North Sea production is on a long-term downward trend.
"Scotland’s public finances are therefore expected to weaken relative to the rest of the UK again unless onshore economic growth could be boosted to grow revenues from income tax, VAT and the like.
"That’s not impossible and the Scottish Government has rightly highlighted the UK’s poor productivity performance, including relative to many of the small northern European countries that it is suggested Scotland could emulate. However, boosting productivity and growth is far from certain and would be easier said than done.
"Experience from recent weeks suggests the markets may not look favourably on fiscal plans built on the uncertain hope of a substantial future boost to growth."
Scottish Labour finance spokesman Daniel Johnson said the Scottish Government had “no answers to the key economic questions” of independence and Scottish Lib Dem leader Alex Cole-Hamilton said the plan was “a dangerous recipe for years of chaos”.
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