Scotland Would Get A Credit Rating

Scotland Would Get A Credit Rating.

Credit rating agency Moody’s has suggested that if Scotland were to vote for independence, its credit rating would be A rather than the higher Aa1 (just below the highest Aaa) that the UK has.

Moody’s suggests that the remaining UK credit rating would remain unchanged and that Scotland in time would be able to work towards higher ratings.

Why is a credit rating important?

• It reflects a country’s ability to settle its debts.
• It impacts on the costs of borrowing for a country when borrowing. 
• The lower the credit rating the more expensive it is for a country to borrow money.

The UK currently enjoys extremely low rates of interest that it must offer to borrow money, although the UK’s credit rating was cut a year ago, so we are lower than Germany, the USA and Canada i.e. it is usually cheaper for those countries to borrow – although the UK Government still enjoys borrowing at lower rates than France, Spain, Greece, Italy, Ireland etc.

What does this mean for an independent Scotland?

It means that it will cost Scotland more to borrow, but only marginally.

The above is based upon the fact that the Conservatives, Liberal Democrats and Labour all oppose a currency union i.e. Scotland will have to offer its own currency.

This means that there will be a ‘settling down’ time for Scotland’s currency and then exchange rates and ultimately its ability to borrow money to fund the country, infrastructure developments and the like.

We still believe that an independent Scotland will initially be bad for Scotland, its businesses and short term future.  Long term, we believe Scotland would recover as it finds its place in Europe and the World.