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Chart of the Day: would an independent Scotland be AAA rated?

And what would the impact be for the rest of the UK? Jim Leaviss, one of M&G’s bond vigilantes, has had a go at answering these questions.


by Chris Marshall on Jan 04, 2012 at 11:55

How long can the union hold together? Not the European one, nor its fragile inner currency bloc, but the one that comprises England, Scotland, Wales and Northern Ireland?

Just before Christmas, outgoing cabinet secretary Sir Gus O'Donnell warned that keeping the UK together over the next few years will be an ‘enormous challenge’. An independence referendum is after all expected in 2014 or 2015.

The threat of independence is great enough that the City’s finest have started to crunch the numbers on the potential fallout. Jim Leaviss, fund manager at M&G and among the investment company’s ‘bond vigilante’ bloggers, questions whether a newly independent Scotland would retain the UK’s prized AAA credit rating.  

Too much debt and Scotland doesn’t have a chance of finding favour with the markets. Leaviss reckons that debt/GDP and revenues versus interest costs look good for Scotland on a headline basis – by that he means if they get away without having to take on the liabilities accrued by saving Scottish banks. ‘The assets of Royal Bank of Scotland (RBS.L) and (Halifax) Bank of Scotland (HALpa.L) alone dwarf the size of the Scottish economy’, he notes.

Then he asks, is that relatively low debt burden maintainable? Leaviss turns to research published in 2007 showing that Scotland spends much more than its revenues – and would need to borrow about £10 billion a year plus its share of gilt interest.

‘So £13.2 billion of deficit, compared with GDP of £143 billion is about 9% – about the same as the UK is running right now, but way above a sustainable number (for example the uniformly ignored Maastricht limit for eurozone members is at 3%).’

This figure falls to 5% if you add North Sea oil into the equation. But North Sea oil production will fall dramatically. ‘So again, if I’m rating Scotland as a stand-alone entity, I worry what will happen going forwards,’ he says.

The graph below shows that 'on the back of envelope', as Leaviss puts it, Scotland looks relatively well-positioned.

Source: M&G as at December 2011

But it’s complicated. It’s not clear whether Scotland would keep the pound, adopt the euro or print its own currency. The ratings agencies will also care about economic growth, and here Scotland performs relatively poorly, Leaviss says.

What’s more, ‘ratings agencies favour big, systemic nations over smaller ones where there is an implied higher risk factor (rightly or wrongly) and given the experience of Iceland and Ireland, which both held AAA ratings, perhaps the agencies would err on the side of a lower rating.’ 

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50 comments so far. Why not have your say?

mark gordon

Jan 04, 2012 at 12:26

When looking at this subject i have always found that it is almost impossible to attribute company earnings and tax liabilities. The most obvious example is the fact that although almost all Shell and BP activities are based in Scotland all their tax liabilities are always attributed to London. This is the case right across the board and even covers large parts of the whisky industry. I always trusted OECD figures as the only ones with no axe to grind. They split the UK into 11 economic regions, omly three of which are mainly in the black. These three are Greater London, London Bristol corridor and Scotland. I would be very interested to hear more non political views and better still any more reliable number crunching that anyone could provide.

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White Stick follower

Jan 04, 2012 at 12:38

Oh dear Alex Salmond won't like this- it does not suit his agenda.

As a by-line why are the Ratings Agencies so worshipped ? How often have they got it wrong? How many of these omniscient agencies forecast the Lehman's collapse for example? If any did I must have missed it. Anyone want to put me right on this?

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John Brian Lynch

Jan 04, 2012 at 12:44

A minor point but typical of most of the reporting and comment on the Euro zone: loose and loaded wording. In this example: "the uniformly ignored Maastricht limit for eurozone members" was in fact followed very closely by Spain, one of the victims of this whole mess where tight government borrowing was negated by loose private sector lending to finanace an unsustainable property boom.

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Jan 04, 2012 at 12:46

One small point, Scotland's share of the Oil & GAS revenue is only currently around 80%-90% not 100%. This completely ignores the southern NS & Irish sea gas fields. This may be a small percentage difference but at £1-2bn in cash terms makes a huge difference to calculating Scotlands deficit.

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an elder one

Jan 04, 2012 at 12:47

What if the UK left the EU and all its entanglements?

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Keith Snell

Jan 04, 2012 at 12:50

I doubt that any of the figurs are relevent, the fact is that if Scotland became independant of England it would question the viability of retaining Wales in a union, the responsibilities such as defence would also need to be split in financial terms at least, there is so much left wing type expense in both Wales & Scotland that England would probably be at least as well of without either, A referendum for Sotland alone may appeal to fish face but we English would expect a referendum to consult the people of England Scotland Wales & Northern Ireland. It would also free us from paying for so many MPs.

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an elder one

Jan 04, 2012 at 12:54

I meant of course leaving Scotland in it; the EU, that is.

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Anonymous 1 needed this 'off the record'

Jan 04, 2012 at 12:59

Scotland has dire demographics, which won't help. Also factor in major firms leaving e.g. Standard Life and tax revenues will drop further. One of the investment banks also put research out on the utility sector suggesting companies risked geting assets stranded if they invested now.

Leaviss cites the 07 report on spending more than is raised. Having lived there for many years until last summer, I am well aware of the trend post-07 of cutting off revenue streams like bridge tolls, maintaining an overly generous free prescription scheme while promising lavish spending plans. It's a financial disaster in waiting.

I don't think independence would be a good thing for anyone bar Salmond and his nationalist cronies.

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Jan 04, 2012 at 13:00

Keith Snell

You write "A referendum for Sotland alone may appeal to fish face but we English would expect a referendum to consult the people of England Scotland Wales & Northern Ireland."

Why would you expect the rest of the UK to vote on Scottish independence?

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Jan 04, 2012 at 13:16

Perhaps its about time for an English referendum to see about the union and the costs of it. That might be a curious question - but I suspect there are more important things to worry about.

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Philip Morgan

Jan 04, 2012 at 13:25

Interesting to see how Scotland would cope if a high proportion of UK public sector jobs were lost to the Scottish economy - presumably England would not want to continue outsourcing public sector jobs to Scotland.

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John Brian Lynch

Jan 04, 2012 at 13:29

Good point, PensionMan, there were no referenda on the "acts of union". As to splitting down defense costs, none of the smaller nations in the EU spends nor feels the need to spend as much of iteir GNP on defense as the does the UK.

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The cynic

Jan 04, 2012 at 13:53

Why would we break up the Union? The UK is too small to lose even the smallest part of it! Do the Scots truly want to be independant? I find mixed views when I talk to my Scottish friends and colleagues. I know they support the opposition when England play football but in reality I think we do get on pretty well. If there is a referendum then we, all the citizens of the UK, should vote on it. Let's worry about the important things not the distracting!

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Anonymous 2 needed this 'off the record'

Jan 04, 2012 at 14:15

There was no referendum on the Act of Union because at the time Scotland was broke due to its failed expeditions and colonies in North America. Scotland came begging to England to bail it out. The cost of this bailout was political Union. Scotland kept its legal system and religion.

At the turn of the 1700's England was on its way to becoming a world naval power culminating in the world wide successes against the French in the Seven Years War.

An intersting historical question has always been "how would Scotland have faired if it had retained political independence?" Would it have been part of the success of the British Empire?

My view is that Scotland would have remained nothing more than an agricultural back water on the edge of Europe had it not been for the Act of Union.

Of course it has had its problems but most Scots will hate to admit it but Union was the best thing that happened to both countries.

As for the oil, not all of it is Scottish. I think all the new "Fracking" gas fields are in England. Edinburgh would collapse as a financial centre. High government spending would need to be cut back. Scottish Uni's are already losing out to those in England.

Personally I feel Scotland should go its own way, perhaps they can form a new goldern arc of prosperity with Ireland and Iceland. Remember that one Mr S? Having just gained independence maybe like Ireland you will just hand over control of your country to the EU?

Once gone Mr S will have to talk real politics rather than just blaming Scotland's problems on the English.

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Jan 04, 2012 at 14:22

Salmond will continue to run rings round the unionist parties and the Scots will vote to cease funding SE England rail infrastructure projects, Olympic vanity projects, illegal wars, nuclear defence and will no longer want to be controlled in poverty through lack of investment, thrown the scraps of a few public sector jobs. Wales, the SW and the North will follow suit in due course and Westminster politicians will reap what they have sown for decades yet ignored the calls to do anything about the inequities of the countries demographics. Once the bankers have only the home counties to rape for their pounds of flesh the regions may choose to offer to subcontract some of their low value public service jobs to whatever is left of England.

Have to laugh at considering IF Scotland will be allowed the oil within its territorial boundary! Or will Cameron send a task force to take control and put these pesky Scots back in their place - another unaffordable war? I suppose we'll be asking IF Scotland will ask for its share of UK overseas assets? The £230bn BoE reserves? SNP have already valued the antiques in the Paris embassy for said asset allocation pursposes.

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Tony Drew

Jan 04, 2012 at 14:42

If Scotland became independent, will we be able to ship all that pesky Scots in England back over the border? Think we could get rid of Ferguson and all those other useless football managers not to mention Fiona Bruce.r

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John Brian Lynch

Jan 04, 2012 at 14:53

Thanks for the lesson Anonymous2 but you misconstrued my comment. You missed the lack of capital letters in "acts of union". I was referring to the acts of invasion by the English Crown under Edward 1st and others over many centuries.

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an elder one

Jan 04, 2012 at 14:58

Things never change among the ruling classes, ever exercising their egos and bugger the plebs!

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White Stick follower

Jan 04, 2012 at 15:18

Don't forget that a vast proportion of, at least, the last government and the, then, Senior Civil Service, were Scots. Most of the senior Civil Service is still in post- and it is the Senior Civil Service,'the Manadarins' as they are known, or more correctly the Permanent Secretaries who really run the country,carefully steering ministers and ensuring that ministers say what they are told.

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mr trick

Jan 04, 2012 at 15:32

I like Fiona Bruce so there have to be a vote on ethnic cleansing. I still think that it is wrong that the Scottish get about £1500 more than England spent on them from central funds.

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Jan 04, 2012 at 16:10

If Scotland could dump its lefties it could become another switzerland. I like Fiona bruce as well.

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Jan 04, 2012 at 16:21

As a Scot who has worked in England for over 10 yrs I find it somewhat sad how discussions along these lines can turn into something I would see in the pub after 6 pints. I'm not for independence but one thing that Salmond plays well is the fact that Scots become nationalistic if they feel their country is under attack. As we come towards the referendum, the more critical 'English commentators' are about the prospects of Scotland the more Scots will vote in favour 'just to prove them wrong'.

Whilst Scotland is extremely dependent upon public sector spending, leading to average income being above the UK average, one has to wonder what the historical impact has been from having a remote government. If you give your children more pocket money than they need, then you stifle their willingness to go out and earn anything else.

One final comment on the Act of Union. No vote was ever taken in Scotland to join and as a previous commentator stated, Scotland joined so that 'your debts become our debts'. Whilst those debts were accrued from foreign overseas ventures, not least one to build a 'panama canal' decades before it became a reality, most miss the fact that England actually went out of its way to stifle any chance that Scotland had in succeeding overseas. It used its Navy to blockade and stop trade. Giving someone an option to join you with a gun against their head is hardly a fair offer.

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Tony Drew

Jan 04, 2012 at 16:21

OK. We dump the Scots in the Civil Service and substitute English people who know something about manufacturing.

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Graham Williams

Jan 04, 2012 at 16:57

Might be good for job creation with all the new Border Control officers needed on both sides.

This though might be countered by loss of tourism jobs and income with many like myself not prepared to get a passport to take my annual holiday there, and at the same time spending on Christmas and birthday present shopping.

Also who votes in the referendum, English living in Scotland, Scots living in England. The latter probably outnumbering the Scots living in Scotland.

The whole thing seems to me to be somewhat of a farce aiming to create largish fish in a tiny pool which does not fit in well with an increasingly global world.

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Jan 04, 2012 at 17:34

The most certain way to get a "Yes to Scottish Independence" is to include the English in the vote!

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Jerry Jones

Jan 04, 2012 at 18:24

One consequence would be unbreakable Conservative majorities at Westminster

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chris wood

Jan 04, 2012 at 19:25

In the good old days when the scots came across the border and raped our cattle followed by our going over there and giving them a good hiding we knew where we stood. my vote would be for getting rid of these mealy mouthed politicos and get back to some honest to goodness rape and pillage. politicos know only one mantra which is to expand job oppertunities for there own jaw flapping particularily useless contribution to mankind. get real pick up your pitchfork and hop on the train north.

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Jan 04, 2012 at 21:27

Would have been a rural backwater without the union? Scotland had four universities for centuries, England only managed a third, Durham, in the late 19th century. School education was compulsory fron the 16th century, visiting English noblemen were astounded that ordinary Scots were literate, which was more than most of them! Thus, the long tradition of invention and scholarship. Look at that extra £1500 a year as compensation for the hundreds of billions of pounds Scotland gifted to you, which Thatcher used to pay for unemployment and other welfare payments during her economic experiment, which may well have averted revolution during the 80's.

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stiff watt

Jan 04, 2012 at 22:43

Did they include all the bankrupt Scottish banks?

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Clive B

Jan 04, 2012 at 22:45

I'd be interested to know how they'll calculate the proportion of UK reserves AND UK national debt that Scotland should inherit.

I say - if they want independence, good luck to them, let them go. Similarly, if there's enough call in England for us to break up the Union, let's have a vote. As someone said, that's an almost guaranteed way of giving them (and us in England) independence.

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Ian W

Jan 04, 2012 at 23:02

To get back to the main point of the article, boring though that might be:

" It’s not clear whether Scotland would keep the pound ... "

Surely if the present Euro crisis has taught us anything it is that sovereign countries cannot share a common currency without fiscal, monetary, taxation and probably eventual political union. The very things that a move to Scottish independence would seek to remove, so the Scots would have use either the Euro (good luck with that one!) or their own pound. Them retaining the pound sterling after independence would put the English (or remains of the UK) taxpayer in the same jeopardy as the Germans viz a viz Greece and the other Club Med countries.

Personally I hope the Union remains in tact but if the Scots want independence, good luck to them. However, I find it an oxymoron to be "independent within the EU" when it's now more clear than ever that nation states will be deader than Python's Parrot as the Super States roles on. Forget face painting the Saltire and get practising the EU flag, colours are the same you'll just have to master the stars!!

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Jan 04, 2012 at 23:06

As mentioned earlier, had it not been for the hundreds of millions of oil revenues, the UK would have gone bust in the 80's, due to the high costs of unemployment, and the loss of 25% of UK manufacturing, during the last Tory economic experiment. To paraphrase JFK, they could'nt run a cathouse, and the same comedians are repeating the same mistakes of the 30's.

If there had been proper regulation,the current mess would never have happened, but no, we were told, the market is king, government should keep it's nose out. Funny how those same people were running to the taxpayer to get bailed out. Those who were criminally negligent should be in prison for five years, that's the kind of bonus they deserve

Getting back to Scotland(!) all we need to know is that it is consistently in the black ( before oil). End of.. it's up to Scots if they wish to return to being an independent country.

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Ben Vorlich

Jan 06, 2012 at 15:05

@Anonymous 2

“There was no referendum on the Act of Union because at the time Scotland was broke due to its failed expeditions and colonies in North America. Scotland came begging to England to bail it out.”

No we didn’t.

Consider this excerpt from ‘The History of Glasgow’ By Robert Renwick LL.D. and Sir John Lindsay L.D. (1921)

The third day after her accession, in her first speech to Parliament, Queen Anne recommended the opening of negotiations for a union of the Parliaments of England and Scotland.

The idea was not new . James VI. made a proposal for an incorporating union of the kingdoms, and actually assumed the name of King of Great Britain. Fifty years later, Oliver Cromwell carried the transaction through, and governed the two countries as a single republic, which was only broken up again at the Restoration. King William, in his first communication to the Scottish Parliament, had pointed out the advantages of a union, and the Scots had appointed commissioners to complete the project.

All these movements of a hundred years, however, had been frustrated by the reluctance of the English merchants to admit Scotland to the advantages of their foreign trade.

It was only upon the arrival of another consideration, a real danger to themselves, that these English merchants showed eagerness to secure the union.

Queen Anne was without a direct heir. Her last remaining child, the Duke of Gloucester, had died two years before her accession. In the event of her own death there was the possibility of serious trouble over the inheritance of the crown, and the English saw with alarm the likelihood of disastrous results if once more there should be separate kings ruling on the two sides of the Border. England was then at war with France, and the issue was doubtful. The battle of Blenheim had not yet been fought. And if the weight of Scotland were thrown into the balance in favour of the fleur-de-lys the prospect would be serious indeed

But the English were not yet prepared to meet Scotland on equal terms. While anxious to obtain for themselves the political security which a union would give, and to admit certain products of Scotland which would be helpful to their own manufactures, they proposed to shut out other Scottish products, which might compete with their own; they refused to allow Scottish merchants to trade with the English plantations in America; and they insisted that the Company of Scotland must cease its operations. [Hill Burton, viii. 82.]

In view of the unfairness of these terms it is not surprising that on 9th September, 1703, the Scottish Parliament withdrew its commissioners, and in emphatic language declared their commission to be "terminate and extinct."

Under the Act of Security of the 1704 every man in the country who could bear arms was being trained by monthly drills. In Glasgow captains, lieutenants, and ensigns were appointed for the various companies, and severe penalties were imposed on any who did not accept their appointment and fulfil their duties. Certain Glasgow merchants, also, anticipating a demand for munitions of war, began to import gunpowder on a considerable scale, and the magistrates took the opportunity to lay in large supplies. [Burgh Records, 12th and 17th Feb. 1704.] Nothing seemed more likely than that, should the Queen die, the two kingdoms would be embroiled almost immediately in the flames of war.

With these facts in view the English Parliament and the English nation at last saw it to be their interest to arrange a union of the kingdoms on something like equal terms.

Commissioners were accordingly appointed, thirty-one on each side, and after secret and exciting labours, which lasted for a week more than two months, a scheme of union was produced.

When the details of this scheme were made known in Scotland a storm of opposition at once broke out.

What Scotsmen had wanted was a federal, not an incorporating union.

[Hill Burton, viii. 137.]

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Tony Drew

Jan 06, 2012 at 16:09

Seems to me that everyone thinks that we are all better off without the other. The English will no longer have to subsidise the Scots, the Scots will have their `freedom` and we can ship all those Scots living in England back over the border and solve our unemployment problem into the bargain, so just let it happen and we will all be happy.

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chris wood

Jan 06, 2012 at 16:25

well said tony. trouble is of course they will want the best of both worlds as usual. "INDEPENDANCE" whilst living and working in england . benefiting from it whilst singing the praises of their native land. How is it that those scots who praise there country the most insist on poluting england with their presence.

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John Brian Lynch

Jan 06, 2012 at 16:44

Shame you can't speak your own language very well Chris. Your measured comments should remind us that the English invited themselves to take over countries all over the world, beginning with their neighbours, then helped themselves to anything they wanted and ethnically cleansed everywhere they went. Oh, and the victims who had been invaded and politacally raped should feel grateful for the homour that was done them.

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Jan 06, 2012 at 19:27

Well Chris and Tony, fortunately or not depending on your point of view, Scotland would remain in the E.U. whether it likes it or not, and labour enhoys free movement. Every time I visit Edinburgh there seem to be more Anglo-Saxons living there. Believe me your feelings are reciprocated.

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Tony Drew

Jan 06, 2012 at 20:53

Hi John Lynch

I seem to remember that when the English took over the world the Scots were bragging that they were in the vanguard when it came to building the British Empire!

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Ben Vorlich

Jan 06, 2012 at 22:21

How old are you exactly Tony ? You seem to have an exceptional memory ! :D

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chris wood

Jan 07, 2012 at 02:17

If the scots could have managed it they would have done the same in the name of scotland. They failed of course in north america and begged the english to bale them out. not unlike recent events in the banking world. It amazes me how the scots managed to get the reputation as " canny" with money when history demonstrates that there principal expertise is double dealing and incompetance. how much was the scots parliament building over budget??? says it all really. wouldnt trust them with a bag of magic beans. ock aye the noo

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Doug Miller

Jan 07, 2012 at 12:01

I suggest that those wishing to get a better understanding of Scotland's likely financial standing as an independent country read the McCrone report ( commissioned in the 70s by the Conservative government and supressed for 30 years by the suceeding Labour and Conservative governments until released under Scottish government pressure because of the Freedom of Information Act ) and the more recent in-depth studies by the world renowned economist Professor Hughes-Hallet. The findings - uncomfortable for the British unionists - is that Scotland would be a very viable independent country. However, the unionists needn't worry as the likelihood of Scotland becoming independent is nil given the Scottish cash cow to be milked by the UK , the bombardment of misinformation and scare stories in the media - Leaviss's fag packet analysis is an example - and, probaly the most overwhelming reason, that the submarine bases for the UK's and USA's nuclear deterents are based in the Clyde a few miles from Glasgow ( very unlikely the Home Counties would agree to these bases being moved closer to London ! ).

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Jan 07, 2012 at 17:02

If Scotland goes independent, can we stop paying cyclops's pension and shift the liability for him and Darling and the like to Scotland and no money under any formula?

Maybe Salmond will do for Scotland what cyclops did for us.

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Jan 07, 2012 at 17:07

Doug, that was then, and since then they have lost a lot of heavy industry and are now quite largely dependent on services shipped out from London and whisky.

The same goes for Wales, but nae whusky!

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Jan 07, 2012 at 22:24

However did Scotland survive as a nation for 1,000 years before the Union? This came about because the English were wetting themselves at the thought of a Stuart monarch, the hereditory rulers of Scotland. Plus to divorce the connection with the French, Scotland's oldest allies. Even today there are memorials to the thousands of Scots soldiers who fought against the English in France, to preserve French liberty from the teutonic English. Until 1939, all Scots automatically enjoyed French citizenship.

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Tony Drew

Jan 08, 2012 at 12:21

That explains everything. Who wants enemies when you have friends like the French!

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Jan 08, 2012 at 16:37

Well, as they say, my enemy's enemy is my friend.

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Chris A via mobile

Jan 11, 2012 at 04:31

As I see it, the key issue that would define Scotland's economic destiny after independence will be its choice of currency. There are three options:

1) join the Euro - that was always the SNP's plan, but recent events in the Eurozone have undermined its credibility - and there's much more pain still in store for the "eurozone" (ie. they still haven't decided how the sovereign debt will be paid down and, for some big countries like France and Italy, there are some big sovereign debt repayments to be made in 2012). 

In such circumstances, would the SNP successfully sell Euro membership to the Scots? 

2) keep the pound sterling - but all you do is replicate the "Eurozone" problem within the island of Great Britain - ie. Scotland having its own fiscal

policy, with monetary policy controlled by the remnant-UK with its much larger economy. The "Eurozone" problem has shown this model doesn't work. And even if Scotland and the remnant-UK each promised to be financially prudent so as to avoid replicating the "Eurozone" problem on this island, would international investors (scarred by the "Eurozone" experience) be prepared to believe such a promise and invest much-needed funds in both countries?

Also, what would be the point of this option if, having become independent and potentially antagonised the "auld enemy" in the process, one necessarily ends up in economic cahoots with them but with no or little say in monetary policy?

3) Scotland issues its own currency - the immediate problem for Scotland with this option is that you automatically create transaction costs for Scottish business (which you can be sure that businesses will resist). The more fundamental issue is that Scotland will need to show very visibly from day one of independence that it is an economically-sound country that stands up to investor scrutiny. If it can demonstrate economic credibility, then it will be able to borrow on the international markets at cheap market rates on a par with AAA rated countries. If it can't, then it will necessarily borrow more expensively which will cost the Scottish taxpayer more and so undermine the argument that Scotland would be wealthier outside of the UK - one of the key arguments for independence.

This is where it gets interesting - would an independent Scotland be economically credible? I give a qualified "yes" to that question, but it would come with some potential/consequence to the Scots and one wonders whether they'd be prepared to pay for it. Two factors currently conspire against Scotland . The first factor is that it enjoys a well-funded public sector (e.g free tuition fees, free prescriptions etc), but desires a low-tax economy in order to attract inward investment. The problem for Scotland is that that is very hard to achieve. Similar countries that enjoy a well-funded public sector, like Sweden, also have high taxes - would the Scots therefore be prepared to see their taxes rise to fund this, or see public spending cuts (such as scrapping tuition fees) instead? Unfortunately, the expected revenues generated by North Sea Oil won't resolve this problem, because the revenue Scotland can expect to generate from oil will be volatile thanks to the fact that North Sea Oil has passed peak production and will now steadily decline from now on - making the oil price subject to market forces (ie. when there is a world oil shortage, Scotland benefits as the oil price rises; conversely, when there is a world oil glut - e.g. when the USA turns on its Strategic Petroleum Reserve to mitigate against rising oil prices - Scotland loses out as the oil price falls.) As I understand it, in 2009, Scotland would have been only able to generate a modest budget surplus (£1.6bn) once its public spending commitments versus its revenues (including from oil) are taken into account. That surplus will be harder to maintain with ever-increasingly volatile oil prices.

Secondly, Scotland has a demographic problem - as in much of the Western

World, there are too many old people with too few young people to support their pension entitlements. Would the new fledgling nation retain its workforce, or would it migrate south of the border to the much larger remnant-UK economy where greater opportunities potentially lie? This will be a key risk for a newly-independent Scotland.

An unresolved issue, as already pointed out, is what would Scotland's share of the massive RBS bail-out liability be?

So, weighing up all these factors, in my opinion an independent Scotland could certainly make a go it economically, but it won't be easy.

Interestingly, the SNP have been very silent on the currency issue since the "Eurozone" crisis began. Unfortunately for them, they can't afford to be silent as it is a crucial issue and is one which will determine their true economic competence.

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Bongo Brian via mobile

Feb 25, 2013 at 09:29

Oh dear, the Unionists will be having to squirm, now that the UK has lost its' AAA rating.

Looks like yet another boomerang unionist argument has come back to malkie them on the napper! lol

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Feb 25, 2013 at 10:17

I still dont understand why we living south of the border dont get a vote on this.

It should not be assumed that we want to stay in the union with Scotland.

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mark gordon

Feb 25, 2013 at 12:03

Hey Andy i also have a query, why do 480,000 English folks living in Scotland get a vote when Scots living in England or elsewhere can vote in a UK general election or council election but not the independence referendum. Suppose practicality issues come into play but i feel it just plays into the hands of the conspiracy theorists.

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