AN INDEPENDENT Scotland would have the second highest fiscal deficit of any advanced economy, creating an extra £1,000 per head above current UK levels, according to Treasury analysis.
The consequence would be higher taxes and spending cuts to balance the Edinburgh books, insisted Danny Alexander, the Chief Secretary to the Treasury.
The warning came as the leading credit rating agency Fitch said, based on the latest polling numbers, it expected a No vote in September but claimed the UK would need longer to recover its triple-A debt rating if Scotland gained independence and said, while it assumed an independent Scotland would gradually repay its share of debt to London, this would "leave the UK exposed to Scottish credit risk, at least in the early years of independence".
A Coalition insider made clear this bolstered the reasoning behind all the main Westminster parties ruling out a currency union with an independent Scotland.
But a Scottish Government spokeswoman hit back, stressing how figures showed an independent Scotland would be the 14th wealthiest country in the OECD compared to the UK at 18th and that between 2008 and 2013 Scotland was in a stronger fiscal position compared to the UK to the tune of £8.3bn or £1600 per capita.
"Independence will give Scotland the economic tools we need to grow the economy more quickly and improve the fiscal position.
"Our proposals for a formal currency union, which fully take account of the integrated cross-border banking sector, and which include rules for joint fiscal prudence, makes sense for the rest of the UK."
The Treasury analysis is based on new global fiscal forecasts released this week by the IMF as well as the most up-to-date independent estimate on an independent Scotland's fiscal position from the Centre for Public Policy Research.
These, it said, showed a tax and spend deficit of 5.5% in 2016/17, equivalent to £9.5bn, or £1760 per head; this would be around £1000 greater than the UK's deficit per head in the same year.
The Treasury emphasised how the latest independent forecasts were in "stark contrast" to the Scottish Government's contained in its White Paper, which "understate the likely size of the deficit in the first year of independence by over two percentage points of GDP".
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article