Scottish Secretary, Michael Moore, will forecast economic doom for
an independent Scotland today
Scottish news: UK could lose triple-A status without Scotland
Scottish Secretary Michael Moore is today expected to forecast an independent Scotland losing its triple-A agency rating prompting the Scottish government to warn that it is in Westminster's interests to keep Scotland in the Union thanks to "Scotland having stronger public finances than the UK as a whole".
In rebutting the accusations over Scotland losing its triple-A status, the Scottish government point to North Sea oil revenues which "boosted the UK's balance of trade" by "£40 billion in 2011" and Scotland's fiscal surplus over the last few years in which Westminster's debt has risen dramatically.
By extension the Nationalists are presenting Scots' voters with the possibility of the remainder of the UK losing its fragile triple-A agency rating should Scots vote yes in 2014 or facing increased debt and austerity if they elect to remain inside the Union.
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The UK’s credit rating currently has a negative outlook with both Fitch and Moody’s credit rating agencies. On an internationally comparable basis Scotland’s share of UK debt in 2010 would have been 64 percent of GDP, compared to the UK’s 76 percent, the EU’s 80 percent and the G7’s 114 percent.
Recently, UK public and private debt combined was estimated, by Morgan Stanley research, to have reached one thousand percent of GDP. No other G10 nation comes anywhere close to this level of debt explaining why the Bank of England cannot raise interest rates as neither the population, business nor the government can afford the increased interest payments.
In a speech to the pro-Union CBI Scotland business organisation today, Mr Moore will claim that Scotland benefits from the UK's 'strong' triple-A credit rating - a privilege it would lose should Scots vote yes.
UK "Drowning in debt"
The SNP, by contrast, argues that while the UK economy is "drowning in debt" Scotland's small European neighbours are thriving providing a model for Scots to consider when weighing up their referendum options.
Consider the UK deficit this year of £120bn, argue the Nationalists, pushing total Westminster debt towards a £1.5tn over the term of the current Tory-led government. By contrast Scotland's neighbour, independent Norway's Oil Fund grew £18.3bn ($29.3bn) to £413.3bn ($660bn) making it the richest sovereign wealth fund in the world, according to the latest rankings issued by the Sovereign Wealth Fund Institute (SWFI).
A spokesperson for the Scottish government said: “We are entirely confident of Scotland having the top credit rating – in common with other small nations such as Finland, Denmark, Norway and Sweden – and that position is supported by Scotland having stronger public finances than the UK as a whole, and lower public sector debt. Denmark, Finland, the Netherlands and Sweden all enjoy a lower cost of borrowing than the UK.
“Indeed, almost two thirds of the countries deemed to have triple A status by Standard & Poor’s have a population of less than ten million.
“In addition, Oil & Gas UK estimates that the sector boosted the UK’s balance of trade in goods and services by £40 billion in 2011 – almost halving the UK’s deficit.
The spokesman added: “We have been self-governing in domestic policy for some 12 years now, and this administration has balanced the budget in each and every year since 2007.
“Year-on-year, Scotland is in a stronger financial position than the UK as a whole. Taking all Scottish revenues and all spending in Scotland into account – including the net cost of the financial sector interventions – the official GERS statistics show that Scotland has been in a stronger fiscal position than the UK as a whole over the five years to 2010/11 to the tune of £8.6 billion.
“Scotland’s public sector debt is lower than the UK’s, and lower than the EU and G7 average – confirming our underlying economic strength with independence: Scotland would be the sixth-wealthiest country in the developed world in terms of GDP per head.
"We currently have a Fiscal Commission Working Group precisely to oversee work to establish a fiscal and macro economic framework for Scotland with independence. It comprises two Nobel Laureates - Professors Joseph Stiglitz and Sir Jim Mirrlees – and also internationally renowned economists Professors Andrew Hughes Hallett and Frances Ruane.”
Ratings agency Fitch reports it is “impossible at this stage” to speculate on a possible rating for an independent Scotland.
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