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by Staff reporter
27 October 2023
Scottish Government bonds will boost case for the Union, economist claims

First Minister Humza Yousaf announced the bonds plan at the SNP conference

Scottish Government bonds will boost case for the Union, economist claims

Scottish Government bonds will show the taxpayer it is better to stay in the Union, an economist claims. 

The Edinburgh administration could enter the international bond market by 2026, under plans announced by First Minister Humza Yousaf

Proceeds will be used to pay for "vital infrastructure" like affordable housing, Yousaf said, and the move will mark the first use of powers devolved to the Scottish Parliament in 2016. 

Dr Savvas Savouri, chief executive of Toscafund Asset Management, says the same powers must now be devolved to Wales "to ensure Scotland does not become a special case within the Union". 

And, writing for Holyrood with researcher Ed Kerr-Dineen, he argues that Scottish bonds – already being referred to as "kilts" – will "reinforce to the Scottish taxpayers how remaining in the Union is so much more economically favourable than being outside it". 

The pair suggest Westminster will "welcome" the issuance of Scottish bonds – but will demand the roll-out of "tartan taxes" and make changes to Scotland's block grant, telling the SNP: "The Barnett Formula is at an end". 

The comments come after Phoebe O'Carroll-Morgan of Charlotte Street Partners said there are "questions about the value for money for the Scottish taxpayer" and "borrowing via existing mechanisms may simply be better bang for the government's buck". 

She said of the announcement, made at SNP conference: "By projecting the image of fiscal autonomy, the policy will play well with a party base that is hungry for evidence of progress on the independence agenda." 

The Scottish Government has an annual borrowing limit of £450m, and a total limit of £3bn.

An investor panel of executives from financial institutions has backed the bonds plan. Members include Andrew Telfer, senior partner at fund manager Baillie Gifford, Angus Macpherson, chief executive of merchant bank Noble & Co, Alexandra Basirov, Bank of America's head of sustainable banking solutions in Europe, Middle East and Africa, and Judith Cruickshank, the chair of the Scotland board at RBS.

Others include ex-Skyscanner finance director Shane Corstorphine, former STV chair Baroness Ford, previously the STV chairwoman, and Global Infrastructure Partners founding partner Michael McGhee.

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