Scotland faces JUNK credit rating if Sturgeon leads nation out of UK, warns Moody's
SCOTLAND'S credit rating could be classed as 'junk' if it were to split from Britain amid a huge hole in its finances thanks to falling oil prices, top rating firm Moody's has warned.
Edinburgh would be left with a massive budget deficit if it were to go it alone, Colin Ellis, Moody’s chief credit officer for Europe, the Middle East and Africa told the Sunday Times.
Oil values have more than halved since Scottish referendum in 2014 from more than $100 a barrel to around $50 today.
If Scotland had then voted to leave the UK it would probably have been rated between A to Baaa, according to Mr Ellis.
But now an independent state would be set for a credit par with the likes of Azerbaijan and Guatemala, with a sub-investment grade rating of Ba or lower - known as junk - compared to Aa1-rated Britain.
Sturgeon GRILLED over Scotland's major economic problems
Mr Ellis said: “In 2014 we said that, even if you took an optimistic view on the division of oil revenues when it was $100 a barrel, Scotland would inherit a starting fiscal position that was no better than the UK’s.”
“The big thing that’s changed is oil prices are now around $55.
"Nobody can predict oil prices but even if you take an optimistic view the fiscal position for Scotland has clearly worsened.
“That means you would be starting from a high fiscal imbalance that the Scottish government would immediately need to address.
"You would need to raise taxes or cut spending. If not, that would put the normal downward pressures on ratings.”
It comes as Nicola Sturgeon presses on with her call for a second Scottish independence referendum when the terms of Britain's exit from the European Union is apparent.
Theresa May has knocked back demands from the Scottish First Minister and said now is not the time for a fresh vote.
Polls show if a vote were held now, the majority of Scotland would vote to stay in the UK.
The latest figures show that Scotland’s economic growth was just a third of UK's headline rate, largely because of lower oil prices.