Risky business

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The analysis of the potential borrowing costs that an independent Scotland would face missed some key factual and hypothetical arguments that merited inclusion in your article.

The presumption of Professors Goudie and Ashcroft (your report, 15 March) was that an independent Scotland would face a higher charge for borrowing as financial markets would deem it a riskier prospect than the remainder of the UK.

However, they neglect to acknowledge that many countries of similar size to Scotland have lower borrowing costs than the UK currently does. According to the Financial Times, the ten-year government bond yields of Finland, Sweden, Denmark, the Netherlands and Austria are all lower than the UK. Furthermore, this has been achieved without Weimar Republic-style quantitative easing, which pushes down yields.

In addition, many smaller countries have a higher credit rating than the UK. As well as the likes of Denmark and Norway, even tiny Luxembourg and Lichtenstein are seen as lower-risk borrowers than the UK 
government.

Perhaps a fairer assessment of the impact of Scottish independence would have been to consider the implications for both Scotland and the rest of the UK. Without the Scottish contribution to UK plc, the debt repayments of the rest of the UK would become heavily reliant on the City of London. To use Prof Goudie’s terminology, this is quite likely to give markets a real case of the jitters.

Calum Mackenzie

Rattray Grove

Edinburgh

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