Could an independent Scotland really have a healthier credit rating than the UK?

Would Scotland really qualify for Standard & Poor's "highest economic assessment"?

This morning the Yes to Scottish independent campaign sent an interesting tweet into cyberspace. Indeed, if you happen to be a supporter of Scottish independence the offending tweet probably warmed the cockles of your heart.

“An independent Scotland could have a healthier credit rating than the UK,” Yes Scotland proclaimed.

This mirrors a claim made by Iain Macwhirter in The Herald at the weekend:

“According to one of the world’s biggest rating agencies, an independent Scotland might have a AAA credit rating even without taking the oil into account,” Macwhirter wrote.

“Standard & Poor’s reported on Thursday that an independent Scotland would ‘qualify for our highest economic assessment’. Its analysts looked at Scottish economic fundamentals like on-shore GDP and concluded that an independent Scotland would be up there with triple A-rated countries such as Germany,” he added.

And indeed, Standard & Poor’s did say that Scotland would face “significant, but not unsurpassable” challenges if it went it alone.

But would it really qualify for Standard & Poor’s “highest economic assessment” and “be up there with triple A-rated countries such as Germany”?

Not according to the report which the Yes campaign have very selectively quoted from.

A closer look at the report in question finds that Scotland would struggle to match the UK’s AAA credit rating unless it managed to negotiate a currency union with London or the eurozone – something ruled out by the three leaders of the main political parties.

The Standard & Poor report actually says the following:

“Our ‘AAA’ rating on the UK is supported by the country’s power to issue a global reserve currency and the depth of its local capital markets, denominated in this currency.”

It adds that:

“the absence of access to liquidity support from the Bank of England or the ECB…would leave investors more reluctant to lend to Scotland’s banks in a new currency that may not benefit initially from deep capital markets”.

So in sum, there is very little reason to think an independent Scotland would be assured a AAA credit rating, despite the SNP/Yes campaign bluster.

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6 Responses to “Could an independent Scotland really have a healthier credit rating than the UK?”

  1. Bill Cruickshank

    This is the “too poor” part of the Scotland’s too wee, too poor and too stupid to go it alone argument employed by unionists for centuries. It was initially rehashed and used by unionists in Scotland when the Scottish Government announced it was to hold a referendum on independence. However, once leading UK politicians such as Cameron, Miliband and Cable admitted that an independent Scotland was perfectly viable, it lost all credibility and is now rarely deployed. Instead unionists are now relying on bankers, insurance agents and oil tycoons to do their dirty work. “Project Fear” as Better Together anointed itself, is now in full swing and is deploying a barrage of capitalist institutions to scare Scots into subservience. It is a deplorable, despicable tactic, but one destined to fail. For what the unionists are failing to realise is that their scare stories have lost effect. You can only say boo once. Also the YES vote is being won in the housing schemes and poorer areas of Scotland. For hundreds of thousands of Scots the union has offered nothing apart from misery, unemployment and deprivation. 47% of children in Glasgow live in poverty, 870,000 Scots live below the breadline, shocking figures after 307 years of the “greatest union in history”. YES will win despite the scare stories and Scots being told that they are too wee, too stupid and too poor to govern themselves.

  2. Craig lewis

    Actually S&P said that without a currency union Scotland would struggle to keep its AAA rating. There will of course be a currency union after a Yes vote despite its orchestrated rejection as part of “project fear”. But in the unlikely event that there wasn’t , then as the Daily Telegraph pointed out last month, the rest of the UK would lose its rating as a result of the increased debt burden it would then inherit.

  3. ShuggyMcGlumpher

    Salmond and the SNP want independence but would still like UK plc to be on hand to bail out our humongous banking sector. This is why the nats took a hissy fit in response to the suggestion that the rest of the UK might find this arrangement less than congenial. We’re left with plan B, which we now know is to pretend that there’s nothing wrong with plan A. Welcome to the surreal world of the Independence referendum ‘debate’. I don’t think the opinions of credit ratings agencies matter much compared to the likely outcome. If there is a Yes vote and there is no currency union and Salmond is true to his lunatic threat to pretend that Scotland’s share of the UK’s debt doesn’t exist, then an independent Scotland will struggle to borrow money from Wonga. If the nationalists want independence, they could try arguing for it instead of pretending it’s in their power to impose a currency union on a UK they have just rejected? Novel idea, I appreciate. The Irish Free State launched their own currency and negotiated the debt with HM Government. They didn’t whine about being bullied, despite the fact that their claim to being victims of this was obviously rather better than Scotland’s.

  4. uglyfatbloke

    The referendum should n’t be entirely dominated by economics. The gnats are n’t wrong about everything. The currency stuff is campaign material and of course Osborne etc. know it. OTH the gnats are weak on personal liberty and should be attacked on their complete and utter failure to offer anything better than what already exists. The Yes campaign is pretty shoddy; the only thing that keeps them from looking entirely useless is the incredible incompetence of Better Together and the dafter assertions from various figures…Johann Lamont’s claim that Scots ‘are n’t genetically programmed to make political decisions’ is a particularly cringe-making example.

  5. J TINTO

    First Minister in missing records riddle over Hollie Greig abuse allegations

    Share on facebookShare on twitterShare on emailShare on pinterest_shareMore Sharing Services14

    Scottish Government is refusing to disclose whether it has lost or
    destroyed communications records relating to the Hollie Greig case which
    may indicate when the First Minister Alex Salmond became aware of
    allegations of sexual abuse, which Ms Greig claims was carried out
    against her over many years whilst resident in the Aberdeen area.

  6. J TINTO

    Project stupid have hit here some time ago,are you independent if another country set your interest rates,no.

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