A leading economist has warned that an independent Scotland would be “unwise” to bet its future on high energy prices.
Gordon Hughes, professor of economics at Edinburgh University, said volatility in the energy market is currently “diffused” over a larger economy, but would be “acute” when concentrated in Scotland.
Formerly a senior adviser on energy and environmental policy at the World Bank, he also said setting-up an sovereign oil fund would be a “necessity” but that Scotland would be starting from a “much worse position”, compared to Norway.
In a new report, he said: “It would be unwise for an independent Scotland to place too large a bet on the view that the cyclical character of energy prices and the energy market has been repealed.”
He added that Scotland would depend on exporting energy to the rest of the UK, but said there was no guarantees Scotland would gain access to that market.
“It is argued that there is a strong mutual interest in maintaining integrated markets,” he said.
“That view may be too optimistic: history tells us that when countries break up, then unified markets tend to weaken quite rapidly thereafter with strong incentives to replace imports by domestic production.”
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