The economic knives have come out against the Yes Campaign on the eve of the Scottish referendum. Several reports yesterday cast doubt on Scotland’s future in the event of a Yes vote, most of it concerning Salmond’s twin bugbears – Scotland’s use of the pound and its share of the UK’s debt.
Economists at UBS have suggested that the new country would need to borrow 88% of its GDP immediately if it took on its share of the UK’s national debt. As an independent Scotland would be unlikely to be able to raise these funds itself, it would need to rely on the UK government for a loan of up to £100bn. Otherwise, UBS warned rather grimly, Scotland would face a severe recession.
Salmond has previously mooted that Scotland could cheekily walk away from its share of UK debts, if it didn’t get a currency union with the UK. This option, however, has also been dismissed by the economic soothsayers.
A report by the National Institute of Economic and Social Research (NIESR) yesterday said using the pound while ignoring its debt obligations would lock Scotland out of European and international markets. The NIESR said Scotland would lose its credit rating by defaulting, and consequently would need to return ‘to a fiscal surplus and therefore unprecedented austerity’.
Alan Miller, chief investment officer at fund manager SCM Private, put it more bluntly. ‘If the Yes campaign wins,’ he said, ‘there is a good chance Scotland will become the next Greece.’
It isn’t just economists and fund managers ganging up on the independence movement, either. The bosses of Prudential, EDF Energy and Thomas Cook have all also weighed in on the side of a No vote in the last few days, as has Bill Clinton, of all people.
None of these pronouncements will be very welcome to Salmond this close to the vote (anyone would think they did it on purpose...), but there is a glimmer of hope for the ‘ayes’. The latest polls by ICM and Survation show a 52-48 split by decided voters against independence, which means the 8-14% of voters still undecided could easily swing it in their favour.
Indeed, while Betfair is apparently so confident of a Better Together victory that it’s started paying out on some of its bets, ICM’s boss Martin Boon has said this referendum could be his industry’s Waterloo, returning a surprise Yes vote despite the polls. Salmond, of course, will be hoping for another Bannockburn.