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Assets and liabilities and Scottish independence

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  • Angus Armstrong
  • Monique Ebell

Abstract

This paper considers how the economically important assets, liabilities, and institutions in the UK could be divided if Scotland becomes an independent country. We find that on the basis of any reasonable division of existing assets and liabilities, Scotland would begin its independence with a substantial debt burden and less scope for risk-sharing with the rest of the UK. In order to reduce this debt burden, an independent Scotland would have to adopt a restrictive fiscal stance for many years. We estimate that Scotland would need to run primary surpluses of 3.1 per cent annually in order to achieve a Maastricht definition debt-to-GDP ratio of 60 per cent after 10 years of independence. This would be more restrictive than the fiscal tightening in the UK over the last 4 years.

Suggested Citation

  • Angus Armstrong & Monique Ebell, 2014. "Assets and liabilities and Scottish independence," Oxford Review of Economic Policy, Oxford University Press, vol. 30(2), pages 297-309.
  • Handle: RePEc:oup:oxford:v:30:y:2014:i:2:p:297-309.
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    File URL: http://hdl.handle.net/10.1093/oxrep/gru017
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    1. Dr Monique Ebell & Dr Angus Armstrong, 2013. "Scotland’s Currency Options," National Institute of Economic and Social Research (NIESR) Discussion Papers 415, National Institute of Economic and Social Research.
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    Cited by:

    1. Ostfeld, R. & Reiner, D., 2019. "Exploring public support for climate action and renewables in resource-rich economies: The case of Scotland," Cambridge Working Papers in Economics 1987, Faculty of Economics, University of Cambridge.

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