‘No triple-A credit rating’ for independent Scotland
Remaning attached to Westminster-based economic policy may no longer make sense for Scotland
An independent Scotland would not be able to count on receiving triple-A status, credit rating agencies warned today, potentially leading to higher borrowing costs if there is a break from the UK following the 2014 referendum.
The three major credit rating agencies have indicated that an independent Scotland would not automatically inherit the UK’s rating – the highest available.
The agencies – Standard & Poor, Moody’s and Fitch – do not publicly comment on unsolicited ratings and the Scottish government has not yet sought a draft opinion. However, one credit agency today told the Financial Times that Scotland could expect to receive an investment grade rating, but some notches below triple-A.
A poor credit rating indicates credit agencies are of the opinion that a government has a high risk of defaulting on a loan. Countries with such a score face higher rates of interest in order to attract investors.
This makes credit more expensive for both domestic households and business borrowers – and is likely to lead to higher bills.
Most small countries of an equivalent size to Scotland do not enjoy a triple-A rating.
The speculation on a future Scotland’s rating is expected to come as a blow to the SNP.
The Scottish Government has asserted that it was “inaccurate” to suggest an independent Scotland would not be rated triple-A and has sought to play down fears that going it alone would raise the cost of servicing Scotland’s share of UK national debt.
John Swinney, Scotland’s Finance Secretary, insisted he was confident of a top rating because was “it was difficult to deny the effectiveness and strength of the economy”.
When asked if he had sought rating guidance from the credit agencies he said the Scottish Government “have not had a draft opinion” yet.
Moody’s methodology for sovereign bond ratings states: “Immature economic and political institutions increase the risk of unpredictable behaviour in times of stress, inviting negative credit implications.”
The agency says countries more vulnerable to “sudden changes to the economy” could expect lower ratings.
This is expected to apply to Scotland because 12 per cent of the notional revenues an independent Scotland could hope to collect would come from volatile North Sea receipts.
The Scottish Government has insisted independence would strengthen the economy north of the Border. Fiscal flexibility would allow it to cut corporate tax rates to encourage companies to locate profits in Scotland.
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Comments
There are 71 comments to this article
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rider000
Tuesday, February 7, 2012 at 02:13 PM70 Gillie............... Indeed I can't find anywhere in the article where it states that a Scottish state running it's own affairs, which I presume must mean also it's own central bank, would definately not receive a AAA rating. All it says is that is far from guaranteed. As this would have implications for lending rates then it would be prudent for the government to obtain a guidline rating approximation from the agencies. if it's bad news then there is no need to publish it and if it's good news it'd be great SNP propaganda.
Gillie
Tuesday, February 7, 2012 at 09:03 AMRufus and the Con Man, rushing in and and taking the above report "that an independent Scotland would not be able to count on receiving triple-A status, credit rating agencies warned today". as to mean Scotland would not be rated as AAA, nowhere in the statement does it say " No triple-A credit ratingâ for independent Scotland", the two lap dogs hoping beyond hope that is true, have you ever seen such a pair of cringing uncle Tom's taking a unsubstantiated report and twisting it as fact, despicable behavior from unionist desperados.
Old Jim
Tuesday, February 7, 2012 at 01:01 AMComment removed by moderator
Anagach
Monday, February 6, 2012 at 10:21 PMComment removed by moderator
Charles P
Monday, February 6, 2012 at 08:32 PMThat this 'unattributed' quote came from the Financial Times does not surprise me in the slightest. I warned right at the start of this debate that the full panoply of the British Governments Dirty tricks Dept. would be turned against Scotland, MI5, MI6, MIi23 Aleery, Tories (Blue) Tories (Red) and even the despicable Liberals, and how much more Tory can you get than the Murdoch owned FT? One quick call from Colonel Blimp and they'll swear Black is White. For Heavens sake, grow up.
Auld Twa
Monday, February 6, 2012 at 06:20 PMWhat was the question ? ============= Will Scotland automatically inherit the UK's credit rating ? ========== Will the remainder of the UK and Scotland each automatically inherit the UK's credit rating ? ============= We are told that there is no inheritance of credit rating but can only guess the question.
Agent P
Monday, February 6, 2012 at 05:32 PM61Wardog doing the conga with Rufus Monday, February 6, 2012 at 05:19 PM 60. Yes, the sky may fall in but we can always conga! =============================================== Are you on drugs? Okay, against my better judgement I will ask, what is all this conga nonsense?
Cuntryman
Monday, February 6, 2012 at 05:22 PMPerhaps Mr Swinney should get a draft credit rating from standard and poor? Then publish it?
The Harder They Come
Monday, February 6, 2012 at 05:21 PMIt's clear that Rufus is anti-scottish, he truely hates Scotland, hates Scots and hates being here amongst Scottish people. He hates the language, hates the politics, hates glasgow, hates galswegians, hates the snp and everyone who votes for them, he hates the parliament, he hates it all.
The Harder They Come
Monday, February 6, 2012 at 05:20 PMHas anyone asked if the Uk will retain it's AAA rating when they don't have ready access to oil & gas? - Will the Uk have a AAA rating this time next year? - More unionist naval gazing nonsense.
The Harder They Come
Monday, February 6, 2012 at 05:19 PM60. Yes, the sky may fall in but we can always conga!
Agent P
Monday, February 6, 2012 at 05:05 PM58Brit-free Monday, February 6, 2012 at 04:56 PM name the spokesman of the named agency ============================================= Yes that is so important isn't it? The Financial Times article can't possibly be true because there is no spokesman name? You are either making it up or you are a totally deluded fool.
amicus alba
Monday, February 6, 2012 at 04:59 PM52. Brit Free. -------------------------------------------------------------- I can't answer who will take up the mantle of staying within the UK. So far there is no great personality coming to the fore and I don't think there will be one. -------------------------------------------------------------------------Maybe this will be one of these times where facts (as opposed to jingoistic victimhood, screeching and name calling) will be the deciding factor and so far - (unless your an unquestioning disciple) - every single 'fact' that Salmond and Co. have come out with has proven to be -- well how do I put it -- BS. Anything that has come their way that does not fit in with their utopian Jonestown dream has been dismissed utterly as untrue. The SNP cannot admit that things will not be sweet and rosy. Which, I suspect, will ultimately be there undoing.
Brit-free
Monday, February 6, 2012 at 04:56 PMname the spokesman of the named agency , who gave attributable quotes on a matter which these agencies have a policy of NOT commenting ....i have said that i didnt read the F T ,so if the information i have requested exists ...ie the identification of a spokesman and the agency that he represents openly stating in quotation marks that Scotlands credit ratings would be deliteriously affected...it would be a matter of nothing for you to furnish that information .....who actually said what to whom , on the authority of which agency ?
amicus alba
Monday, February 6, 2012 at 04:55 PMComment removed by moderator
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