Scotland's credit rating becomes an issue

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

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.

George Eaton is political editor of the New Statesman.

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The problems with ending encryption to fight terrorism

Forcing tech firms to create a "backdoor" to access messages would be a gift to cyber-hackers.

The UK has endured its worst terrorist atrocity since 7 July 2005 and the threat level has been raised to "critical" for the first time in a decade. Though election campaigning has been suspended, the debate over potential new powers has already begun.

Today's Sun reports that the Conservatives will seek to force technology companies to hand over encrypted messages to the police and security services. The new Technical Capability Notices were proposed by Amber Rudd following the Westminster terrorist attack and a month-long consultation closed last week. A Tory minister told the Sun: "We will do this as soon as we can after the election, as long as we get back in. The level of threat clearly proves there is no more time to waste now. The social media companies have been laughing in our faces for too long."

Put that way, the plan sounds reasonable (orders would be approved by the home secretary and a senior judge). But there are irrefutable problems. Encryption means tech firms such as WhatsApp and Apple can't simply "hand over" suspect messages - they can't access them at all. The technology is designed precisely so that conversations are genuinely private (unless a suspect's device is obtained or hacked into). Were companies to create an encryption "backdoor", as the government proposes, they would also create new opportunities for criminals and cyberhackers (as in the case of the recent NHS attack).

Ian Levy, the technical director of the National Cyber Security, told the New Statesman's Will Dunn earlier this year: "Nobody in this organisation or our parent organisation will ever ask for a 'back door' in a large-scale encryption system, because it's dumb."

But there is a more profound problem: once created, a technology cannot be uninvented. Should large tech firms end encryption, terrorists will merely turn to other, lesser-known platforms. The only means of barring UK citizens from using the service would be a Chinese-style "great firewall", cutting Britain off from the rest of the internet. In 2015, before entering the cabinet, Brexit Secretary David Davis warned of ending encryption: "Such a move would have had devastating consequences for all financial transactions and online commerce, not to mention the security of all personal data. Its consequences for the City do not bear thinking about."

Labour's manifesto pledged to "provide our security agencies with the resources and the powers they need to protect our country and keep us all safe." But added: "We will also ensure that such powers do not weaken our individual rights or civil liberties". The Liberal Democrats have vowed to "oppose Conservative attempts to undermine encryption."

But with a large Conservative majority inevitable, according to polls, ministers will be confident of winning parliamentary support for the plan. Only a rebellion led by Davis-esque liberals is likely to stop them.

George Eaton is political editor of the New Statesman.

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