The government has granted Scotland the power to issue its own bonds in what the chancellor has described to be a ‘historic move’.
The Treasury has said the Scottish will be permitted to issue up to £2.2 billion in debt to fund investments in various infrastructure projects.
The idea was first mooted in an amendment to the Scotland Bill in June 2011 and today’s announcement - which is ahead of schedule - comes as the nation prepares for September’s referendum on independence.
However, the Treasury warned the cost of issuing Scottish bonds would be ‘significantly’ higher than the UK because of the higher ‘credit risk’ north of the border.
Danny Alexander, chief secretary to the Treasury, said: ‘It will of course be up to the Scottish government to manage their borrowing, but this is complemented by the tax powers in the Scotland Act providing the Scottish government with an independent source of revenue to support borrowing costs.’
Chancellor George Osborne added: ‘[It is a] historic moment for Scotland, a country where the economy is growing with the government's long term economic plan. Being able to issue its own bonds gives Scotland new powers and new responsibility, within the security of the UK.’