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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Commons Confidential: Fearing the Wigan warrior

An electoral clash, select committee elections as speed dating, and Ed Miliband’s political convalescence.

Members of Labour’s disconsolate majority, sitting in tight knots in the tearoom as the MP with the best maths skills calculates who will survive and who will die, based on the latest bad poll, observe that Jeremy Corbyn has never been so loyal to the party leadership. The past 13 months, one told me, have been the Islington rebel’s longest spell without voting against Labour. The MP was contradicted by a colleague who argued that, in voting against Trident renewal, Corbyn had defied party policy. There is Labour chatter that an early general election would be a mercy killing if it put the party out of its misery and removed Corbyn next year. In 2020, it is judged, defeat will be inevitable.

The next London mayoral contest is scheduled for the same date as a 2020 election: 7 May. Sadiq Khan’s people whisper that when they mentioned the clash to ministers, they were assured it won’t happen. They are uncertain whether this indicates that the mayoral contest will be moved, or that there will be an early general election. Intriguing.

An unguarded retort from the peer Jim O’Neill seems to confirm that a dispute over the so-called Northern Powerhouse triggered his walkout from the Treasury last month. O’Neill, a fanboy of George Osborne and a former Goldman Sachs chief economist, gave no reason when he quit Theresa May’s government and resigned the Tory whip in the Lords. He joined the dots publicly when the Resolution Foundation’s director, Torsten Bell, queried the northern project. “Are you related to the PM?” shot back the Mancunian O’Neill. It’s the way he tells ’em.

Talk has quietened in Westminster Labour ranks of a formal challenge to Corbyn since this year’s attempt backfired, but the Tories fear Lisa Nandy, should the leader fall under a solar-powered ecotruck selling recycled organic knitwear.

The Wigan warrior is enjoying favourable reviews for her forensic examination of the troubled inquiry into historic child sex abuse. After Nandy put May on the spot, the Tory three-piece suit Alec Shelbrooke was overheard muttering: “I hope she never runs for leader.” Anna Soubry and Nicky Morgan, the Thelma and Louise of Tory opposition to Mayhem, were observed nodding in agreement.

Select committee elections are like speed dating. “Who are you?” inquired Labour’s Kevan Jones (Granite Central)of a stranger seeking his vote. She explained that she was Victoria Borwick, the Tory MP for Kensington, but that didn’t help. “This is the first time you’ve spoken to me,” Jones continued, “so the answer’s no.” The aloof Borwick lost, by the way.

Ed Miliband is joining Labour’s relaunched Tribune Group of MPs to continue his political convalescence. Next stop: the shadow cabinet?

Kevin Maguire is Associate Editor (Politics) on the Daily Mirror and author of our Commons Confidential column on the high politics and low life in Westminster. An award-winning journalist, he is in frequent demand on television and radio and co-authored a book on great parliamentary scandals. He was formerly Chief Reporter on the Guardian and Labour Correspondent on the Daily Telegraph.

This article first appeared in the 27 October 2016 issue of the New Statesman, American Rage