Journal Article

Assets and liabilities and Scottish independence

Angus Armstrong and Monique Ebell

in Oxford Review of Economic Policy

Published on behalf of The Oxford Review of Economic Policy Ltd

Volume 30, issue 2, pages 297-309
Published in print January 2014 | ISSN: 0266-903X
Published online August 2014 | e-ISSN: 1460-2121 | DOI: https://dx.doi.org/10.1093/oxrep/gru017
Assets and liabilities and Scottish independence

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  • National Budget, Deficit, and Debt
  • Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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This paper considers how the economically important assets, liabilities, and institutions in the UK could be divided if Scotland becomes an independent country. We find that on the basis of any reasonable division of existing assets and liabilities, Scotland would begin its independence with a substantial debt burden and less scope for risk-sharing with the rest of the UK. In order to reduce this debt burden, an independent Scotland would have to adopt a restrictive fiscal stance for many years. We estimate that Scotland would need to run primary surpluses of 3.1 per cent annually in order to achieve a Maastricht definition debt-to-GDP ratio of 60 per cent after 10 years of independence. This would be more restrictive than the fiscal tightening in the UK over the last 4 years.

Keywords: Scottish independence; debt; fiscal sustainability; H63; E62

Journal Article.  6841 words. 

Subjects: National Budget, Deficit, and Debt ; Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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