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Concern over public finances

Ex-Bank governor says Scotland could go-it-alone

Lord KingScotland could be an independent country but its public finances would take a hit, said the former governor of the Bank of England last night.

Lord King, who led the Bank between 2003 and 2013, said Scotland may face challenges attempting to borrow on the international markets. But he said there are plenty of independent countries of a similar size to Scotland.

“It has… the people, it has a capital city, a history and culture, it could be an independent country. The question is, does it want to be given the consequences of it?” he said in a television interview.

“And if the oil price remains low and if they lose the money which is transferred from the rest of the UK to Scotland, then they would have to make that up in their own budget, but that’s a consequence of deciding to be financially independent, you end up paying for yourself.

“And it would be a challenge to borrow on the international market if Scotland decided to run a large budget deficit. I think that would be expensive, the interest rate would go up.”

On the currency issue, he said: “I don’t think there are any major problems in terms of currency, that was the thing project fear focussed on last time, but there is an issue about public finances.”

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