Let’s start with the scaremongering – then move onto the facts.

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Monday, 12 March 2012 23:41

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By a Guest writer

That could be the epitaph of Scotland’s anti-Independence politicians. Particularly those who are now using the scare story that Scotland may not enjoy a AAA credit rating from all of the major rating agencies.

This – they say would put up the cost of borrowing for the Scottish Government and damage the prospect for future growth.

A pretty chilling scenario which is, unsurprisingly, completely at odds with reality.

Let’s look at the numbers.

On Valentine’s Day, when the UK AAA rating came under threat and Moody’s downrated their score to AA negative the UK – with a net debt of 72.9% of GDP – was paying yields of 1.0, 2.1 and 3.3% on its 5,10 and 30 year bonds.

Canada however with three AAA stable scores and a net debt half the level of the UK (34.9% of GDP) was paying more (1.4%) on 5 year gilts, the same (2.1%) on 10 year gilts and less (2.6%) on its 30 year debt.

And Japan, with a colossal 130% of GDP net debt and two AA negative scores was paying less than the UK or Canada on its 5, 10 and 30 year bonds (0.3, 1.0 and 1.9%).

In short any politician who tells you there is a direct read-across from a rating agency score and a real yield doesn’t know what they are talking about.

So what does this tell us about Scotland?

Well firstly it confirms that unionist politicians who to try to imply a worse rating for Scotland than the rest of the UK are wrong. Not least because Scotland has been in a better fiscal position than the UK as a whole for the last five years.

And secondly, it renders laughable the idea that anyone could imply a higher yield based on an implied agency rating.

The truth is it is the yield that counts – not the AAA rating or lack of it.  This should be a salutary lesson to for the anti-Independence campaign in Scotland.

But also a lesson for George Osborne who now needs to stop obsessing over the AAA status.