How much debt would an independent Scotland have? (2023)

What would independence for Scotland actually mean in practice? As the political row over an independence referendum rumbles on – on what questions to ask, and when – Guardian commenters have been asking in their droves what would happen on several key day-to-day issues if Scotland voted "yes".

Commenter harbord summarised these questions nicely in a post below a previous Reality Check:

Will the terms of the independence be agreed before the vote? I'm not eligible to vote but if I was I would like to know details on matters such as defence, amount of debt that Scotland would inherit, currency, EU membership, etc.

Without a prior agreement I can foresee Alex Salmond using the 'intransigence of the English' as a rallying call for the SNP in the 2015 general election when he is denied independence on terms that are highly favourable to Scotland, which he surely will demand

These questions are the subject of a special week-long series of Reality Checks, looking at the fate of sterling, oil revenues, and even the BBC.

Today – hopefully with your help – I'm tackling what independence might mean for Scotland's national debt, and just as importantly its potential deficit, and credit rating.

How much debt?

Firstly, a caveat: every single aspect of Scotland's postition post-referendum would be subject to doubtlessly intense political negotiations. As a result, any attempts to suggest figures beforehand are at best sensibly-derived estimates, and at worst, guesses.

That aside, a fairly simple way to look at how much debt an independent Scotland might have is to allocate Scottish people their "fair share" by capita of the UK's total debt pile.

The UK's national debt in January 2012 stood at £988.7bn – excluding bank bailouts, a topic to which we will return later.

Scotland's GDP per capita is only slightly below the UK's average (at 98.7% of the UK average), so it is a reasonable approximation to divide this debt evenly by population.

Scotland contains around 5.1 million of the UK's 62.2 million people, which would leave its share of the debt by this working at £81bn.

With UK debt projected to increase over the next five years to around 71% of GDP (it current stands at around 63%), this is very likely to rise.

What about the deficit?

Public sector debt of £81bn is a reasonably large amound for a small country like an independent Scotland, but not necessarily unmanageable. What is perhaps more important is the deficit.

The deficit is the gap between a country's income and its spending – a measure of how much further the government is going into debt each year. This can either be worked out using the current account (ignoring capital projects and other one-off factors), or all-in, which is referred to as "net borrowing" in official accounts.

(Video) How much debt does Scotland owe on Independence.

Scotland's government has already worked out how these would compare to the UK average for 2009/10, in a first set of notional accounts for the country, which attempt to compare Scottish spending with revenue obtained from Scottish taxpayers. They're published in full here.

The accounts quickly reveal the huge importance of North Sea oil to the Scottish economy. This is the subject of a Reality Check later this week, so for now we will stick to the two scenarios outlined in the Scottish accounts.

One is a "per capita" share of oil revenues – giving Scotland around 9% of the proceeds of North Sea oil.

The other is a "geographical share" of oil revenues – which gives Scotland around 90% of North Sea oil revenues, though some dispute the geographical borders Scotland uses to calculate these.

Using the first scenario, Scotland's net borrowing is a parlous £19.3bn in 2009/10 – around 17% of GDP. Using the geographical measure, Scotland's net borrowing is £14bn, or 10.6% of GDP.

This difference is substantial: the UK's net borrowing for the year was 11.1%, so depending on how oil revenues are apportioned, Scotland's borrowing is either slightly less, or substantially more, than the nation as a whole.

The cost of borrowing

Such calculations rely on the assumption that Scotland could borrow for a similar cost to the UK government at present. The UK enjoys exceptionally low bond yields at present, thanks partly to its AAA credit rating, boosted by the effect of the Bank of England's substantial QE (which lowers bond yields).

Commentators have noted, however, that an independent Scotland might not receive so strong a rating. Notable among them is Martin Wolf in the FT (£) who argued:

According to the Scottish government, even with what it calls its "geographical share" of revenue from the North Sea, its overall fiscal position was a deficit of 10.6% of gross domestic product in 2009-10. Yet revenue from the North Sea is set to decline. Moreover, Scotland would presumably inherit a pro rata share of UK net public debt, forecast by the UK Treasury to peak at 71% of GDP in 2013-14.

A newly independent small country with sizeable fiscal deficits, high public debt and reliance on a declining resource for 12% of its fiscal revenue, could not enjoy a triple A rating. Its costs of borrowing might be far higher than those of the UK. To avoid the risk, it would need to lower its debts quite rapidly. This would require even greater austerity than in the UK as a whole.

Missing something?

When calculating Scotland's debt, we used a measure which excluded liabilities obtained through the bank bailouts. Tends of billions were directly loaned to banks, and through guarantees and other deals, the UK as a whole is liable for hundreds of billions more.

The UK's net liabilities without including the banks is £988.7bn. Including them takes the total to around £2,200bn.

Two of the largest recipients of this state aid were the Royal Bank of Scotland and Halifax Bank of Scotland (HBOS, now taken over by Lloyds TSB).

I'll take a look at the debate over how these liabilities should be apportioned, and what this might mean for Scotland, in a later post.

(Video) 10 Economists on Scottish Independence

Any insight of data on this issue – or anything else around Scottish public finances – would be gratefully received. As ever, you can contribute through the comments, via Twitter to @jamesrbuk, or through email to


Trading partners

Data on ways to split the liabilities of public sector banks is so far proving elusive: some take the view it should be split by customer base (which would be problematic given many Lloyds and RBS customers are outside the UK), while a certain school of thought feels Scotland should take the whole burden of RBS liabilities due to the bank's Scottish headquarters.

Neither feels to stretch much beyond opinion to me – so any data or evidence on how splits might work, and their potential consequences would be hugely welcome. Please do send links if so.

One useful thing to note is that if Scotland were to become independent, it would be in the interests of both countries to make sure it was a financially viable nation.

Analysis by Angus Armstrong of NIESR notes Scotland would be a very open economy: businesses owned by the rest of the UK account for around 20% of employment and turnover, with a further 16% coming from other international businesses.

Further evidence from Scotland's experimental data series were even more telling about the scale of the rest of the UK as a hugely significant trading partner:

Combining official and the Scottish government's experimental data series, the total value of exports and imports of goods and services, or all goods and services traded across Scotland's borders, is broadly the same as the value of output consumed within Scotland's borders. In economic terms, this implies that Scotland is a small and very open economy. The rest of the UK is comfortably Scotland's largest trading partner.

Exports to the rest of the UK were equivalent to 40% of national output or more than 60% of total exports, ie more than exports to the rest of the world combined. Imports from the rest of the UK are an even larger proportion of output and imports from the rest of the world.

Such closely tied trading would suggest in the medium and long run, whatever debt settlements were agreed would have to be sustainable in both Scotland and the rest of the UK unless both were to suffer from significant loss of trade.


Ways to split the bank bailout

How much debt would an independent Scotland have? (1)

There's a lively discussion going on in the comments around the issues of debt division and credit ratings – particularly splitting bank debt – throwing up some heat but also a lot of light.

(Video) Scotland: Is the desire for independence growing? | DW Documentary

One particularly interesting and noteworthy point came from AnneDon who pointed out credit ratings need not necessarily be the be-all-and-end-all when it comes to debt levels:

One of the many points raised in Scottish Ministers' Question Time last week, and one of many which Michael Moore responded to with invective rather than an answer was this.

The UK has a AAA credit rating.
Japan has an AA- rating.

However, Japan pays a lower rate of interest than the UK because its economy is healthier.

Surely this is worth mentioning - credit ratings are not the be-all and end-all - it's the overall strength of the manufacturing base that matters.

And, as you've said, Scotland is an open economy, and the intention is to make it an export-driven one.

The issue of bank division is perhaps the most discussed issue (after oil, which is tackled in depth later this week – all this post has done is state two positions stated within the Scottish government's official accounts).

Hireton quotes the view of Professor Hughes Hallett on this issue:

"The real point here, and this is the real point, is by international convention, when banks which operate in more than one country get into these sorts of conditions, the bailout is shared in proportion to the area of activities of those banks, and therefore it's shared between several countries. In the case of the RBS, I'm not sure of the exact numbers, but roughly speaking 90% of its operations are in England and 10% are in Scotland, the result being, by that convention, therefore, that the rest of the UK would have to carry 90% of the liabilities of the RBS and Scotland 10%. And the precedent for this, if you want to go into the details, are the Fortis Bank and the Dexia Bank, which are two banks which were shared between France, Belgium and the Netherlands, at the same time were bailed out in proportion by France, Belgium and the Netherlands."

While this view has many supporters – and some examples in practice – it should be noted it's not the sole view, and has some eminent detractors too.

However, some comment has come through by email (and phone) from people within the City who feel a similar stance is practical. This view stems from the idea that there is in reality only at present a British framework for banking – including backstops, regulation, and ultimate fallbacks.

(Video) Scottish independence: could Britain break up?

To this view, defining a bank as English or Scottish is likely a futile exercise. This reasoning would suggest splitting the UK's bank liabilities on a per-capita basis, as with debt.

This would leave Scotland with £81bn of public sector debt, and around a further £100bn of liabilities from the bank bailouts. Liabilities, it should be noted, largely represent guarantees against default extended by the UK government, rather than actual debt.

A final note from the same financial sources suggests the issue of Scotland's credit rating is as reliant on its currency as its debt. If Scotland were to enter a formal currency agreement with the rest of the UK to keep Sterling (a Euro-like agreement), it would be more likely to keep a AAA rating than if it were to establish a new currency, or use sterling without explicit agreements with the rest of the country.

We're still going – more evidence or opinions on the issue of Scotland's debt or deficit are welcome as ever.


Day one roundup

Right, we're going to round off the above-the-line posts on today's Reality Check here – but we'll keep the comments open for a while for responses to a few final questions.

Thanks to everyone for a really great comment thread – and one quick above-the-line clarification thanks to several commenters is to note the Spanish government has denied it would have any objection to an independent Scotland being a member of the EU.

It's also clear just how reliant the figures mooted in today's post and comments are influenced by the factors up for discussion during the rest of the week, so please feed in any evidence, data or useful information on those as the week goes on so we can build as thorough and fair a picture as possible of the effects of Scottish independence.

We're going to look at whether there's a good way to do a summary of the Reality Checks – including the information from the comments – over the week to make a more definitive round-up later, as suggested by a few people in the comment threads over the day.

One final request from me regards calls in the comments to look at the 1974 McCrone report and several postings from John Jappy, largely referring to evidence from the late 1990s.

I've neglected to incorporate these to a significant extent above-the-line due partly to their controversial nature, but mainly because in a post trying to look at current financial positions and projections (a complex enough endeavour), it seemed most appropriate to concentrate on the most recent evidence, from the Scottish government, NIESR, and elsewhere.

What's your thoughts on the best way to handle this older material – particularly when (as in this case) it's inclusion (or exclusion) is likely to prove controversial?

(Video) What Currency Could An Independent Scotland Use?

• This article was corrected on 28 February 2012 because it referred to the 1974 McCoy report, instead of the McCrone report.


How would an independent Scotland finances itself? ›

The Scottish Government proposes setting up a dedicated Building a New Scotland Fund to invest up to £20 billion over the first decade of an independent Scotland. This would be funded from oil and gas revenues and other windfall income, and where necessary from borrowing.

What would Scotlands share of the national debt be? ›

Scotland's estimated budget deficit ('net fiscal balance') fell from 22.7% of GDP in 2020-21 to 12.3% of GDP in 2021-22: a reduction in the deficit relative to GDP of just over 10 percentage points.

How much is Scotland's debt? ›

5.1 Debt
Debt TypeGeneral FundHRA
Loans Fund Advances outstanding11,7944,173
Credit Arrangements3,7542
Total Debt15,5484,175
Mar 22, 2022

Could an independent Scotland borrow? ›

Whatever currency arrangement it chose, Scotland's ability to borrow would be restricted by what international investors were willing to lend. The implicit Scottish deficit was over 8% of GDP before coronavirus.

Would Scotland be rich if independent? ›

In the short term, independence might weaken Scotland's economy and reduce rather than increase tax revenues. A harder border between Scotland and the rest of the UK, for example, would suppress trade.

Would the UK be richer without Scotland? ›

No, England would be significantly poorer without Scotland's economy. Scotland contributes substantially to the United Kingdom.

Would an independent Scotland take on UK debt? ›

The transfer of debt

An independent Scottish state would become responsible for a fair and proportionate share of the UK's current liabilities, but a share of the outstanding stock of debt instruments that have been issued by the UK would not be transferred to Scotland.

Can Scotland sustain itself? ›

Scotland is an energy-rich nation. In 2021, Scotland generated enough renewable electricity to power all households in Scotland for three years, and exported electricity with an estimated wholesale market value of £2.4 billion. In June 2022, our renewable energy capacity was 13.3 GW , up from 1.4 GW in 2000.

What would scotlands share of UK debt be? ›

"If UK national debt is around £2trillion, the 11:1 ratio will see the Scots take on around £181 billion."

Does Scotland benefit from being part of the UK? ›

At the same time we benefit from being part of the UK; with a UK Parliament that takes decisions on behalf of everyone in the UK on the economy, defence, national security and international affairs.

Why is Scotland a rich country? ›

Oil and gas

Scottish waters consisting of a large sector of the North Atlantic and the North Sea, containing the largest oil resources in Western Europe – The UK is one of Europe's largest petroleum producers, with the discovery of North Sea oil transforming the Scottish economy.

How much money does England give to Scotland? ›

The UK Government's Shared Prosperity Fund fails to deliver promised funding for Scotland after Brexit, which we never voted for. While as part of the EU, Scotland would be receiving around £183 million for 2022-23, the replacement money offered by the UK is only £32 million.

What credit rating would an independent Scotland have? ›

The Scottish economy conforms with the typical profile of sovereigns rated BBB or higher, the report notes.

Can Americans own property in Scotland? ›

Purchasing a Residential Property in Scotland

An overseas buyer purchasing a Scottish property will need to pay LBTT. Those purchasing property in the rest of the UK pay either Stamp Duty Land Tax (in England and Northern Ireland) or Land Transaction Tax (in Wales). No LBTT is payable on purchases of up to £145,000.

Can Scotland be in debt? ›

Despite devolution, the majority of Scotland's tax revenues and a hefty part of its public spending is pooled with the rest of the UK. This means that there is no overall Scottish budget deficit or surplus, or accumulated debt.

Does Scotland pay taxes to England? ›

Most taxes paid in Scotland are not devolved and are collected centrally by the UK government by HM Revenue and Customs. This is also the case for Scottish Income Tax, which is a shared tax.

Who is richer England or Scotland? ›

The Legatum Institute's new 'Geography of Prosperity' index finds Scotland is more prosperous than England based on average income per person along with how happy they feel.

How does Scotland afford free prescriptions? ›

Scotland gets free prescriptions because the government believes mitigating illness costs is in the best interests of the population of Scotland. We receive no extra funding for this and do not take money from other areas of the United Kingdom to pay for it.

How can Scotland get rid of debt? ›

The Debt Arrangement Scheme (DAS) is a scheme set up by the Scottish government. It helps you pay back your debts in a manageable way without the threat of court action from the people you owe money to (creditors). Under DAS you can make 1 regular payment into a debt payment programme (DPP).

Does Scotland have borrowing powers? ›

The Scottish Government must balance its Budget each year and has very limited powers in relation to resource borrowing. The overall limit of resource borrowing is £1.75 billion, and the total annual limit is £600 million.

Would an independent Scotland be poorer? ›

The analysis put forward in this paper, comparing the economic and social performance of the UK (and therefore Scotland within it) to a number of comparator countries suggests – overwhelmingly – that independent countries of Scotland's size do better.

Would Scotland have its own army? ›

Almost 10,000 regular and reserve troops and MOD civil servants work for the Army in Scotland. They deliver UK operations and support to our allies around the world and provide emergency support to the Scottish Government local authorities and public bodies.

Is Scotland more prosperous than England? ›

England's economic output is significantly higher than Scotland's, but the Scottish GDP of £200 billion per year is a lot by anyone's standards. England would not be richer without Scotland.

Who does Britain owe the most money to? ›

The balance of £75bn comprises £25bn in Network Rail loans, £15bn in local authority external debt (local authorities owe £120bn in total, but £105bn is owed to central government) and £35bn in other sterling and foreign currency debt.

What is Scotland's deficit by year? ›

In the 2021/22 financial year the budget deficit in Scotland was 23.7 billion British pounds, compared with 35.8 billion pounds in the previous year, which was the largest budget deficit on record since the 1998/99 financial year.

What would an independent Scotland look like? ›

Scotland is well-placed to become an independent country, with its own devolved parliament, government and institutions already in place. An independent Scotland would have full control over tax and spending (fiscal policy) so that decisions about the economy would be based on what's best for Scotland.

What would the UK be called if Scotland left? ›

Irish independence in 1922 reduced it to the United Kingdom of Great Britain and Northern Ireland. Subtraction of Scotland would, in theory, make it the United Kingdom of England and Northern Ireland. Thus Great Britain (GB) would cease to exist, but the United Kingdom (UK) would continue.

What would Scottish independence mean for England? ›

Independence would mean Scotland leaving the UK to form a new. state; the rest of the UK would continue as before. An independent.

Why is there so much poverty in Scotland? ›

Inadequate income from employment:

Households in which no-one is in paid employment are most likely to experience poverty. Common barriers to work include a lack of suitable employment opportunities, a lack of suitable child care, caring responsibilities, ill health, disability and employer discrimination.

Where do the wealthy live in Scotland? ›

Highest valued towns in Scotland 2022, by average property price (in GBP) Humbie and Gullane in East Lothian, were two of the most expensive towns for residential property in Scotland as of February 2022. The average house price in both towns was estimated at over 500,000 British pounds.

Is Scotland worth living? ›

no wonder you're thinking of moving to Scotland. And, with a cost of living up to 46% lower than other UK cities such as London, a commitment to supporting people at every stage of their life, and a world-renowned reputation as a welcoming and attractive country, there are plenty of great reasons to make the move.

Why does Scotland want independence? ›

The Scottish Government has argued that "it is clear that Scotland currently pays our way within the UK". The Scottish Government argues that an independent Scotland would have full autonomy over decisions on tax, spending and borrowing. Scotland would be able to issue sovereign debt and set fiscal limits.

Why does Scotland pay more tax? ›

It's a progressive system, and is often justified at a higher rate than the rest of the UK (paying 40%) because, in Scotland, everyone gets more stuff without paying for it directly, from student tuition to dental checks and elderly care.

How much tax does Scotland pay? ›

What you'll pay
Taxable incomeScottish tax rate
Basic rate£14,733 to £25,68820%
Intermediate rate£25,689 to £43,66221%
Higher rate£43,663 to £150,00041%
Top rateover £150,00046%
2 more rows

Can you use American credit in Scotland? ›


Visa, MasterCard, Eurocard, Diners Club and American Express credit cards are widely accepted throughout Scotland and Northern England.

Is 871 a good credit score UK? ›

A credit score of 721-880 is considered fair. A score of 881-960 is considered good. A score of 961-999 is considered excellent (reference:

What is the highest country credit rating? ›

S&P is one of the three largest rating agencies in the world along with Fitch and Moody's.
Credit rating of countries with programs in 2021.
CountryCredit rating, forecast
SwitzerlandААА, stable
AustriaAA+, stable
UKAA, stable
SpainА, negative
6 more rows
May 13, 2021

Can an American just move to Scotland? ›

As an American moving from the US to Scotland, you must qualify for a specific visa, this is the most important thing because without this you will reach a dead-end; despite how movies make it seem. And even if you qualify, getting an approved visa to Scotland isn't guaranteed.

Are you legally a Lord or Lady if you own land in Scotland? ›

When you own land in Scotland you are called a laird, and our tongue-in-cheek translation is that you become a lord or lady of Glencoe,” he said. “It is important to emphasise that this is a courtesy title- you can't arrive in Heathrow and demand to meet the Queen, but it is a little bit of fun.

How long can a US citizen live in Scotland? ›

No. US citizens can visit Scotland and stay up to six months without any visa.

Where would an independent Scotland get money from? ›

The Scottish Government proposes setting up a dedicated Building a New Scotland Fund to invest up to £20 billion over the first decade of an independent Scotland. This would be funded from oil and gas revenues and other windfall income, and where necessary from borrowing.

Do you inherit your parents debt Scotland? ›

Debts are paid out of the dead person's estate. They must be settled before an executor can distribute any of the estate to beneficiaries. The executor must give six months for creditors to make claims for the person's debts before distributing the estate, otherwise the executor may be legally liable for unpaid debts.

How long does a debt last in Scotland? ›

For most types of debt in Scotland, the prescription period is five years. This applies to most common debt types such as credit or store cards, personal loans, gas or electric arrears, housing benefit overpayments, payday loans, catalogues or overdrafts.

What is Scotland main source of income? ›

Economy of Scotland
Average gross salary£2,480 / €3,373 / $3,814 monthly (2022)
Average net salary£1,730 / €2,064 / $2,793 monthly (2022)
Main industriesFishing, Food & Drink, Forestry, Oil & Gas, Renewable Energy, Textiles, Tourism
20 more rows

Where do Scotland get their money from? ›

EU funds. Scottish income tax (collected by HMRC) non-domestic rates (collected by local authorities and redistributed by us) devolved taxes (collected by Revenue Scotland)

Where does Scotland borrow money from? ›

66. The Scottish Government borrowed £150 million in 2021-22 to support capital expenditure. This is less than the £450 million originally planned. The borrowing was drawn down from the National Loans Fund in February will be repaid over a 20-year period, at an interest rate of 1.44% percent.

How do Scotland deal with debt? ›

Get help with debt and money
  1. What debt advisers do. A debt adviser can: ...
  2. Organisations that can help with debt and money. These organisations are supported by the Scottish Government and can help with information about debt and money. ...
  3. Housing. ...
  4. Energy bills. ...
  5. Get help from Money Talk Team.
Oct 19, 2022

What is the average life expectancy in Scotland? ›

Falling life expectancy
NL malesScotland females
16 more rows
Sep 29, 2022

Is Scotland a socialist country? ›

Scotland is a democracy, being represented in both the Scottish Parliament and the Parliament of the United Kingdom since the Scotland Act 1998.

Does Scotland accept American money? ›

Paying with cash in Scotland

You can take US dollars with you and exchange them at the airport or make an ATM withdrawal.

Why is Scotland not independent? ›

Scotland was an independent kingdom through the Middle Ages, and fought wars to maintain its independence from England. The two kingdoms were joined in personal union in 1603 when the Scottish King James VI became James I of England, and the two kingdoms united politically into one kingdom called Great Britain in 1707.

Why do England not accept Scottish money? ›

Scottish banknotes are unusual, first because they are issued by retail banks, not government central banks, and second, because they are technically not legal tender anywhere in the United Kingdom – not even in Scotland, where in law no banknotes – even those issued by the Bank of England – are defined as legal tender ...

Why does Scotland print its own money? ›

They're high street banks so are printing notes on behalf of their own bank, whereas the Bank of England's notes are printed on behalf of the whole of the UK. It's a tradition that goes back hundreds of years and is often seen as an important part of national identity.

How long before a debt is wiped in Scotland? ›

If you have started to make payments on a debt after the five year limitation period has run out, your payments will not have revived the debt. The debt is still 'extinguished' and legally no longer exists.

How long can you legally be chased for a debt Scotland? ›

For most types of debt in Scotland, the prescription period is five years. This applies to most common debt types such as credit or store cards, personal loans, gas or electric arrears, housing benefit overpayments, payday loans, catalogues or overdrafts.


1. Does Scotland need its own currency after independence?
(Richard J Murphy)
2. Can an independent Scotland leave the debt
(The Lennox siblings)
3. Does Scotland need its own currency after independence?
(Richard J Murphy)
4. Independent Scotland would face 'huge' economic challenges, former official says
(CNBC International TV)
5. The road to the bawbee currency options for an independent Scotland
(The Royal Society of Edinburgh)
6. Will Scotland leave the UK?


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