Economist's warning

Independence ‘would start with £180bn debt’

Kay and Forbes
John Kay and Kate Forbes

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.

2 Comments to Independence ‘would start with £180bn debt’

  1. I nave no confidence in the snp, since their record has been abysmal in office, education standards falling and the snp remedy is to remove scotland from international education comparison, tslk about sweeping failure under the carpet. The ferry debacle costing hundreds of millions, with two prominent SNP, politicians being involved , Swinney and the first minister. If the top politicians in the SNP, cannot get their act together, why vote SNP?

    • Uk regions with higher standards of education voted against brexit.
      Scotland has no debt but will need to borrow money like every other nation state has done. The first task of any new Scottish government will be to join the EU,with a new centre left government the country will progress and prosper like other small EU states.

Leave a Reply

Your email address will not be published. Required fields are marked as *

This site uses Akismet to reduce spam. Learn how your comment data is processed.