AN INDEPENDENT Scotland would have the second highest fiscal deficit of all the world’s advanced economies in its first year, new analysis by the Treasury has calculated.
Only the US would have a deficit that, as a proportion of GDP, was higher than in Scotland.
The new nation would be hit with a £9.5bn or £1,760 per head deficit in 2016-17, according to Treasury officials using International Monetary Fund figures. This is over £1,000 per head more than is forecast for the UK.
The deficit would be the equivalent of 5.5 per cent of GDP, only very slightly below the expected level in the US.
The news will come as another blow to those who want Scotland to split from the rest of the UK, and was just the first in a series of negative stories for the pro-independence campaign yesterday.
Speaking at the FTSE 100 giant’s annual meeting, BP’s chief executive warned that uncertainty surrounding Scottish independence could hinder energy investment. “We have a £10bn programme [of investment into the North Sea] over the next 10 years, so uncertainties do make us think carefully about issues like currency,” said Bob Dudley. “We’re not going to try and guide the direction but we, like other businesses, do have questions.”
Ratings agency Fitch also rang alarm bells yesterday, warning that a yes vote in the referendum would delay the UK’s return to a coveted AAA credit rating. It is currently rated AA+/stable.
The agency said the move would be deemed to be fiscally harmful: “Scottish independence would likely be mildly negative for the UK’s balance of payments and external balance sheet, albeit its magnitude is highly uncertain,” Fitch said.
Kate McCann, Suzie Neuwirth