SNP claim AAA credit downgrade hurts ‘No’ campaign

A leaked Treasury paper makes note of the UK's then-AAA credit rating. Picture: Ian Rutherford.
A leaked Treasury paper makes note of the UK's then-AAA credit rating. Picture: Ian Rutherford.
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THE SNP has claimed the UK government’s case against independence has been overtaken by events, after a leaked Treasury paper showed officials were basing their case for the Union on Britain’s AAA credit rating.

The paper, passed to The Scotsman, warns that if the country were to become independent, it would be at risk of losing “the AAA credit rating it currently enjoys” by being part of the UK.

But that claim has been made redundant by Moody’s announcement last week that it would be downgrading the UK’s credit status to Aa1.

Treasury officials pointed out last night that the paper was not an official policy document. They also stood by the underlying case that it would be “highly unlikely” for an independent Scotland to be able to borrow at the same low rates enjoyed at present by the UK as a whole.

But yesterday the SNP claimed the UK government was now shown to be basing the case against independence on “assertion, not fact”.

Financial services regulation in an independent Scotland is a background paper by the Treasury. It comes as the UK government prepares to unveil a public document on the economics of independence as part of its Scotland Analysis programme.

The paper is described as “not a statement of government policy, but is intended to assist with working-level discussions with industry as part of the Scotland Analysis programme”.

As part of that exercise, the government is setting out an official view on the likely macro-economic landscape that would be faced by an independent Scotland.

A section on Scotland’s credit rating declares: “In general, wholesale funding costs for firms are linked to the credit rating of the sovereign. The expectation is that an independent Scotland would not have a AAA credit rating it currently enjoys and would most likely have a lower rating than the rest of the UK post-independence.”

Officials in London confirmed last night that, in the papers on independence under preparation, there would be no references to the AAA status.

An SNP spokesperson said last night: “The UK’s triple-A status was a key anti-independence argument of the Tory-led Westminster government and No campaign, and it has backfired badly – this Treasury document is going to have to be rewritten.

“What this episode demonstrates is that the case against independence is based on assertion rather than fact.”

However, UK government sources say their position on the relative credit worthiness of the two countries has not changed.

In the forthcoming papers, they will point to the verdict of economists, who have warned that, as a smaller nation with no previous credit history, Scotland would have to pay a higher cost for the price of its debt, with that cost passed on to banks.