Yanis Varoufakis urges Nicola Sturgeon to base plans for independence around a separate currency

Yanis Varoufakis has weighed into the debate on a potential second independence referendum, with the former Greek finance minister urging Nicola Sturgeon to base economic plans for an independent Scotland around the creation of a separate currency.

Speaking exclusively to Holyrood, Varoufakis said he would back independence if he lived in Scotland, but warned the SNP against repeating its 2014 blueprint, based around a shared pound.

Varoufakis also differentiated between the Scottish independence movement and nationalism in other states, characterising Scotland as “welcoming to refugees, to migrants, to foreigners like me” and describing the Yes campaign as “cuddly”.

The SNP’s independence White Paper contained proposals for Scotland to share the pound in the event of a Yes vote.

But the plans came under fire from unionist campaigners, with an intervention from then chancellor George Osborne, ruling out the prospect of a shared currency, seen as deeply damaging to the case for independence.

The SNP then ordered a new report in preparation for a second independence referendum, with the Sustainable Growth Commission recommending that Scotland retain the pound for a lengthy transition period after a Yes vote, before eventually establishing a new currency once six key tests relating to economic stability were met.

But in an interview with Holyrood, economist and academic Varoufakis described the idea of sharing the pound after independence as “ludicrous”.

He said: “If I were living here, I would vote for Scottish independence, on one condition. A separate currency. Alex Salmond’s great error, which I very much fear Nicola Sturgeon is going to repeat, was to propose independence while keeping the pound. That is nonsense. It is ludicrous. Don’t do it again.”

“I remember talking to my friends in Scotland, those in the SNP, back then and said to them: ‘If you say you are going to keep the pound, you are giving London a fantastic opportunity to rubbish you by saying no, you can’t have it. Bugger off.’ Which is what they did.”

He added: “Scottish nationalism has nothing to do with English nationalism, German nationalism or Greek nationalism. It’s very cuddly. It’s cuddly.

“I would call it patriotism, I wouldn’t even call it nationalism. I make this distinction, and my definition might be wrong but I stick to it. A patriot loves his country, a nationalist thinks his country is superior to the others. I don’t think the Scots think that. That’s why this place is so open, welcoming to refugees, to migrants, to foreigners like me. Whereas English nationalism is not. You can see that with the Scots voting in favour of staying in the EU.”

Read the full interview in the latest issue of Holyrood magazine.