Scotland, Debt and Ratings

The recent action by Standard & Poor's, to downgrade the sovereign debt of certain EU countries prompts me to look at the ratings of all EU members.

Getting accurate data on UK GDP, by region has proven difficult but the Scottish Government reckoned that in 2009 it was £143.8 Billion, which is around 10% of the total UK economy.

Making the, I believe reasonable assumption that an independent Scotland would take on its share of the National Debt relative to its position in the UK economy, would suggest a debt level of £114.9 Billion.  This would still equate to 80% of GDP.

As to ratings.  Only time will tell but I offer Finland and Portugal as possible guides.

Finland
The population is 5.3 Million - close to the Scottish 5.2 million.  The GDP is  .£149.6 Billion

Word of warning though.  It achieves a AAA rating mainly because its public sector deficit 2.5% and its Public Debt is 48%.

Portugal 


The population is 10.6 Million.  The GDP is  £143.3 Billion which is close to that of Scotland..

Word of warning though.  It achieves a BB Junk bond rating mainly because its public sector deficit 9.1% and its Public Debt is 93%.

It is difficult to estimate what would be the Public Sector deficit of an independent Scotland and current data doesn't support analysis because National Debt is considered 'national' and not apportioned to the constituent parts of the Union.

It would probably be wrong to infer that because, according to the Scottish Office GERS report, Scottish Tax Revenue is  £48.1 Billion and Expenditure is £62.1 Billion, that an independent Scotland would run a Public Sector deficit of £14.0 Billion or 29%

I don't think it would be too far fetched though to say that the Scottish sacred cow, that is the public sector would have to be reduced.

Oh! I don't say that the rump UK credit rating would automatically survive as AAA post Scottish independence.  Frankly I think we are fortunate to still have ours, today but given the socialist history of Scotland and a large consensus towards welfare and public spending, I suspect that a post independent Scotland government would be obliged, in the interim at least, to continue on its already unaffordable spending pathway. 

Member States
	GDP Sterling in Billions	Public Debt as % of GDP	Deficit 2010	S&P Rating
Germany	£2,074.0	83%	-3.3%	AAA
France	£1,604.2	82%	-7.0%	AA+
United Kingdom	£1,408.2	80%	-10.4%	AAA
Scotland including N Sea Oil  Estimate	£143.8	80%		???
UK Without Scotland   Delta between Eurostat and Scottish Gov.	£1,264.0	80%		???
Italy	£1,285.5	119%	-4.6%	BBB+
Spain	£882.0	60%	-9.2%	A
Netherlands	£490.9	63%	-5.4%	AAA
Poland	£294.1	55%	-7.9%	A
Belgium	£292.9	97%	-4.1%	AA
Sweden	£287.7	40%	0.0%	AAA
Austria	£236.1	72%	-4.6%	AA+
Denmark	£194.2	44%	-2.7%	AAA
Greece	£191.0	143%	-10.5%	BB Junk
Finland	£149.6	48%	-2.5%	AAA
Portugal	£143.3	93%	-9.1%	BB Junk
Ireland	£127.8	96%	-32.4%	BBB+
Czech Republic	£120.4	39%	-4.7%	AA
Romania	£101.2	31%	-6.1%	BB+
Hungary	£81.7	80%	-4.2%	BB+
Slovakia	£54.7	41%	-7.9%	A
Luxembourg	£34.5	18%	-1.7%	AAA
Bulgaria	£29.9	16%	-3.2%	BBB+
Slovenia	£29.9		-5.6%	A+
Lithuania	£22.8	34%	-7.1%	BBB+
Latvia	£14.9	45%	-7.7%	BB+
Cyprus	£14.5	61%	-5.3%	BB+
Estonia	£12.0	7%	1.0%	AA-
Malta	£5.2	68%	-3.6%	A-
GDP, Debt and Deficits based on information from Eurostat
Scotland GDP is based on Scottish Government estimate as of 2009. - Wikipedia
Scotland Debt is based on Total UK debt of		£1,126.5	80% of UK GDP
Multiplied by Scotland share of UK GDP		10.2%
Equals		£114.9
Relative to GDP stays at		80%
Something to ponder and comment?