Scotland should keep pound for transition period after independence - report

LONDON (Reuters) - An independent Scotland should keep the British pound for an extended period before setting up its own currency, a report commissioned by the devolved government said on Friday as it lays the groundwork for a possible new referendum on secession.

Britain's vote to leave the European Union in 2016 has opened the door for nationalists in Scotland, where a majority voted to remain in the EU. They argue that such a constitutional shake-up against Scotland's will could justify a new vote on independence.

But polls have not shifted significantly since Scotland voted 55-45 percent to stay in the United Kingdom in 2014, in a campaign which was dominated by uncertainties over Scotland's economy, from what currency it would use to the price of oil.

Scotland's First Minister Nicola Sturgeon told Reuters last week that she needed more details on the Brexit deal between Britain and the EU before taking a view on a new independence vote, adding that independence won't be off the table until it happens.

Subtitled "the new case for optimism", Friday's report recommends that Scotland should temporarily keep the pound without a formal currency union.

"The Commission recommends that the currency of an independent Scotland should remain the pound sterling for a possibly extended transition period," the report said, adding that the Scottish government should put in place arrangements for an independent Scottish currency.

Sturgeon welcomed the report and said its recommendations would be debated.

"Scotland is now in a very different political and economic situation to 2014," she said in a statement.

Scottish nationalists are trying to recalibrate their arguments for independence, which were undermined by concerns over the economy in 2014. The lack of clarity over what currency an independent Scotland would use was one of the key issues.

Campaigners for independence were then criticised for having no "Plan B" for Scotland other than a currency union with the rest of the UK, which was ruled out by the London government.

Bank of England Governor Mark Carney highlighted that any currency union with the rest of the United Kingdom would come with strings attached but avoided taking sides in the campaign.

Britain on Friday said that the 2014 decision should be respected.

"Scotland voted decisively in 2014 to remain part of the UK," Scottish Secretary David Mundell said in a statement. "The public do not want another divisive independence referendum."

(Reporting by Alistair Smout; editing by Stephen Addison)