Independence ‘would start with £180bn debt’
An independent Scotland could be burdened with £180 billion of debt from the outset and and be forced to borrow £20bn a year to prop up its finances, according to a former economic adviser to the Scottish government.
Professor John Kay’s warning of the challenges lying ahead emerges as Nicola Sturgeon plans to issue the first in a series of papers arguing the case for independence.
Prof Kay says in a new book A Better Nation that Scotland would find itself saddled with debt.
“It may be reasonable to assume that Scotland would begin independent life carrying, explicitly or implicitly, a pro-rata share of UK debt, which might be in the region of £180 billion,” he writes.
“Scotland would also need to borrow to cover its budget deficit after independence, a figure which might initially be between £10 billion and £20 billion annually.”
Prof Kay concedes that the scale of borrowing required should not be difficult for the government of an independent Scotland to service if it shows “fiscal prudence”.
However, Scotland has seen the gap between spending and income widen over the last five years from £16.3 billion to £36.3 billion, blamed partly on Covid but also on the Scottish government’s spending commitments in such areas as concessionary transport and social security.
Finance Secretary Kate Forbes has been forced to impose severe cuts and withhold inflationary rises to higher tax bands.