Scottish independence

Scotland's Lender of Last Resort Options

Scotland’s lender of last resort options depends on its choice of currency. If Scotland becomes independent, there is no question that it could use sterling. But this looks likely to be without the backing of the UK government and therefore without the Bank of England. Using sterling in these circumstances would constitute an informal currency union or ‘dollarization’.

Scottish Independence and the UK's Debt Burden

The Scottish Government’s White Paper provides an outline of its proposals for dividing the existing UK public debt and how the rest of the UK might be compensated. This note considers the implications of these proposals for the rest of the United Kingdom. We explain that in all cases, the UK’s debt to GDP ratio will rise, with possible consequences for its credit rating. At the same time, Scotland’s debt burden will be lower than the UK’s in all cases.