Independent Scotland could see an 11 per cent budget gap
AN INDEPENDENT Scottish state would inherit a national debt of up to 70 per cent of its GDP, and would expect to face a dangerously high annual deficit, an expert witness warned a House of Lords committee yesterday.
If the debt is divided by population, the country would face a debt of £64-£83bn, Sterling University professor David Bell told the economic affairs committee.
That represents up to 71 per cent of the country’s £117bn GDP.
Meanwhile Bell estimates that in 2009-10, an independent Scotland would have run a budget deficit worth 11 per cent of GDP.
That stands very much in line with the total UK’s deficit in the year, which stood at 11.5 per cent.
However, the calculation is based on the Scottish state gaining roughly 90 per cent of oil reserves – and without access to that declining resource, the deficit would have hit 18 per cent.
Any negotiations to divide assets and liabilities would be fraught with difficulties, Bell warned, particularly due to the fixed nature of some assets, and investor participation in debt deals.