The Staggers

The New Statesman’s rolling politics blog

Scotland's credit rating becomes an issue

Credit rating agencies warn that an independent Scotland may not inherit the UK's AAA rating.

By George Eaton Published 06 February 2012 19:23

The report in today's FT that an independent Scotland would likely not inherit the UK's AAA credit rating will be seized on by opponents of secession as further evidence that, in their view, independence would be economically damaging. One unnamed agency told the paper that it could expect to receive an investment grade rating some notches below triple A. As the FT's Martin Wolf noted in a recent column:

A newly independent small country with sizeable fiscal deficits, high public debt and reliance on a declining resource for 12 per cent of its fiscal revenue, could not enjoy a triple A rating.

In an act reminiscent of his pre-election tactics, George Osborne has already warned, with little evidence, that the threat of independence is damaging investment and that Scotland could be forced to join the euro (even without a formal opt-out, Sweden still hasn't joined after 17 years of membership).

Will Osborne now make play of the uncertainty over Scotland's credit rating? He may be wary of doing so, not least because there's an increasing chance that the UK could lose its own AAA rating. Others will rightly note that France and the US have seen little increase in their borrowing costs since their credit ratings were downgraded.

This hasn't stopped both Labour and the Conservatives going on the attack today. Scottish Labour leader Johann Lamont said it was "extraordinary that the SNP have not even approached the credit agencies for a draft opinion."

Scottish Conservative finance spokesman Gavin Brown said: "Ratings agencies are taken extremely seriously by investors all over the world and this warning is therefore deeply concerning: three of the top agencies agree that a separate Scotland would not be guaranteed a triple-A rating."

It's worth bearing in mind, however, that such scare tactics may only work to Salmond's advantage. Those who oppose Scottish independence need to remember that making the positive case for the Union, as Ed Miliband did in his recent speech, is as important.

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Tags: Scottish independence

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30 comments

Mon, 2012-02-06 19:36 — Lox (not verified)

I predict that in the event of Scottish independence the sky will fall on our heads. And that George Eaton might find something else to write about.

Mon, 2012-02-06 19:39 — Kernow Castellan (not verified)

Whether an independent Scotland would have to join the Euro is a moot point.

Spain has already formally indicated its concern, and would very likely refuse to recognise Scotland for fear of encouraging their own separatists. They have not yet recognised Kosovo for the same reason.

Without Spain, they cannot join the EU, let alone the Euro. Spanish fishermen will continue to fish in Scottish waters.

Tue, 2012-02-07 17:19 — Fergus Pickering (not verified)

Personally I don't think the Scots who stay in Scotland could run a piss-up in a brewery but then I could be wrong.

Mon, 2012-02-06 19:54 — Alistair Reid (not verified)

Kernow. Nonsense. The Spanish have said absolutely nothing of the sort. Unless ofcourse you can provide me with a quote that doesn't mention 'un-named' foreign office sources. That would be the UK foreign office where the quotes originated from.

So, Labour are now going to use the scare story used so successfully by George Osbourne in the run up to the 2010. Says it all. That would be the same rating agencies that performed so well in the run up to the financial crisis.

George, you really need to get your news from Scotland from somewhere other than Scottish Labour!

Mon, 2012-02-06 19:58 — David (not verified)

@Kernow: The Spanish have already said that the story reported in the Independent a couple of weeks ago was rubbish.

These rating agencies will be the same ones that gave the banks a clean bill of health before they destroyed the world economy, I suppose? Of course they are, so their view can hardly be taken seriously. However, of course the Tories and Labour will try to jump on this, despite the high probability that it will hurt their position further.

Mon, 2012-02-06 20:04 — Edward Harkins (not verified)

Another week, another metro-London elites' demeaning scare story about how Scotland can't make it - when are we going to get a serious, informed debate?

Mon, 2012-02-06 20:11 — Livers (not verified)

Boy these credit rating agencies are running the world.

Its a good job they made sure no-one invested in dodgy CDOs .. I mean if they hadn't marked them as junk think of the armageddon that would have ensued back in 2008.

Oh wait.

Seriously, they are becoming all too powerful, who is controlling the state? the people or the markets?

Thu, 2012-02-09 11:33 — Willp

Anthony asserts, "A democratic civic nationalism that merely wants a national sovereignty re-established via the principle of self-determination as enshrined in the Charter of the United Nations is surely benign.Such is the nationalism of the SNP."
Really? The SNP is benign towards London?
What about the democratic nationalism of the British people?
We have all benefited for 300 years from being a united nation.

Mon, 2012-02-06 21:33 — Mr Danger

"These rating agencies will be the same ones that gave the banks a clean bill of health before they destroyed the world economy, I suppose? Of course they are, so their view can hardly be taken seriously."

I love this logic. "They were wrong about that, so they must be wrong about everything". Doesn't give a lot of hope for the Labour party!

Tue, 2012-02-07 19:17 — Lox (not verified)

If we fuck up, Fergus, then perhaps you can come up and tell us what to do? That would be very kind of you, sahib.

Mon, 2012-02-06 21:51 — duck soup

George Eaton states that Ed Miliband made a positive case for the union recently.He didn't.Miliband made a closed system of thought case for the union.As for credit rating.What makes George Eaton so confident that the UK will keep it's AAA rating?Becauase he appears to assume that it will.

Mon, 2012-02-06 21:54 — Anthony (not verified)

The only triple "A" Scotland will have is Salmonds chin.

Mon, 2012-02-06 22:04 — Anthony (not verified)

Most of the self-hating New statesman readers make me sick with there blatant hypocrisy.

If this was about predominately English nationalism or withdrawing from the E.U , you would all be against it. But because it's about Scottish nationalism it Sits comfortably with you.

Where the hell is Willoyen ? (that one man keyboard warrior against all things nationalistic)

Hypocrites.

Mon, 2012-02-06 22:19 — Mizar (not verified)

George is a disgrace. He will NOT do any research. We will NEVER pick up the phone and ask the Scottish Goverment for their view.

NS should sack him.

Mon, 2012-02-06 22:25 — duck soup

Anthony

It's not possible to be against all things nationalistic.To be in favour of preserving the UK as it currently stands is itself a nationalism.To be a utopian who thinks all countries should be abolished is also a form of nationalism since we would all be natives of such a polity.It would therefore be a nation.And an extremely centralised one too with all the unfairness that comes from centralisation.The solution is to distinguish between benign and malign kinds of nationalism.A democratic civic nationalism that merely wants a national sovereignty re-established via the principle of self-determination as enshrined in the Charter of the United Nations is surely benign.Such is the nationalism of the SNP.

Mon, 2012-02-06 22:36 — duck soup

Mizar

Don't be too hard on George.He's just an inexperienced young journo making his way.He's not on the staff of the New Statesman.He's obviously been given the job by the NS of writng pro-union pieces.For all we know he might really think Alex Salmond is the greatest.

Mon, 2012-02-06 23:27 — Peninsula (not verified)

My word - There no let up, is there?

Here's a bloody question, will England keep its AAA rating AFTER Scotland leaves?

Isn't that more relative to most of your readership??

Shouldn't London be keeping its list of scare stories in reserve? Everyday more and more Scots don't care and don't believe them. Nearly three more years of this? My God.

You should be more concerned with your post-independent world. Isn't it strange you never see anything about the consequences for the RUK,after the Jockos go walkies.

Thu, 2012-02-09 21:38 — Derick (not verified)

"We have all benefited for 300 years from being a united nation." oh really? if the links don't work then look up Shetland museum photos R00065 and I00014

Garth, Dunrossness (before)

http://photos.shetland-museum.org.uk/index.php?a=indexes&s=item&key=IYTo...

and after

http://photos.shetland-museum.org.uk/index.php?a=refinesearch&s=item&key...

you know where you can stick your Union Dividend.

Tue, 2012-02-07 02:18 — Christian Wright (not verified)

".. One unnamed agency told the paper . . "

I think that says it all.

Tue, 2012-02-07 07:46 — C Baker

Salmond will end up selling Scotland off to wealthy outsiders.

Tue, 2012-02-07 09:38 — kenelm (not verified)

@Peter, you must be great fun to be with - not. Dismal, grumpy, nothing positive to say about our country.

Tue, 2012-02-07 10:39 — JPJ2 (not verified)

As far as I can see there have been no formal statements from credit agencies about an independent Scotland. This is just another scare story by the 100% unionist press.
It is just another lie like the story that Spain might veto Scotland's membership of the EU-and yes, Kernow Castilian (earlier post), this was denied by the Spanish Foreign Minister (Google it if you don't believe me)

By the way, the USA don't have a triple A rating (S & P)-will they beg to be run from London shortly and stop celebrating American "Separatism" Day (as I am sure they call it) on the 4th of July? :-)

Wed, 2012-02-08 21:58 — Derick (not verified)

Credit rating?? It's the plagues of locusts, boils, frogs, death of the firstborn that worries me.

.:. (digital pith helmet for Lox)

Tue, 2012-02-07 11:42 — J Gordon (not verified)

Unfortunately this looks again like smears and fears. There is no counter argument. It reads like the Daily Mail or the Scotsman. The comment about Spain is a red herring - Kosovo is sui generic, after all Spain recognised Montenegro, Slovenia etc.
Something more strange; are Labour and the Conservatives working in tandem?

Tue, 2012-02-07 13:17 — super huey (not verified)

It's a valid point none the less. If Scotland jump ship they'll take England down too... Alex probably likes the idea of that since he hates the english so much!

Wed, 2012-02-08 12:18 — Fergus Pickering (not verified)

You already fucked up at Murrayfield but sorry, Lox. I'm very happy here. I'm sure Gordon Brown will give you the benefit of his advice. He saved the world. Wee Scotland shouldn't be a problem.

Tue, 2012-02-07 15:46 — Stuart Eels (not verified)

super huey

Where do you get your ideals?

This is the Grand Old Westminister machine in all it's glory, knowing if they keep trying to scare people it might work, personlly, I think it will play right into Alex Salmond's hands and good luck to him.