Debt equals assets

I had a feeling of déjà vu today. I was reading the NIESR’s blog post about the Scottish national debt:

The first option is where an independent Scotland pays the full amount of its share of UK debt at independence, which we call a ‘clean break’ option. Of course, one would need to take the maturity of the debt into account; after all, owing £100 in 10 years time is less burdensome than owing it today. A simple back of the envelope calculation, taking the duration of UK public debt at 8.5 and the 4.1% as the discount factor (the average yield on 10 year UK gilts since 2000) reduces the population share of gross debt from £153bn to £109bn.

I had a strong feeling that I had seen the £109bn figure mentioned in another context, and a bit of googling showed I was right — Business for Scotland recently came up with exactly the same figure for the an independent Scotland’s assets:

An independent Scotland will inherit a fair share of the UK’s £1.3 trillion assets. This is of huge significance. These assets will generate a huge economic windfall for the people of Scotland of £109 billion.

Of course there are many ways to calculate Scotland’s share of the UK’s debts and assets (both the blog posts mentioned above provide many useful details), but it’s still a rather interesting coincidence to find the same figure in both places.

If Scotland can resume its existence as an independent country with hardly any national debt, it will make life much easier, even if buying a navy, fifty embassies and the Scottish share of the Royal Mail will require us to borrow a few billions.

Most countries have some national debt, but the UK has accumulated far too much for its own good, so it will be a huge advantage for an independent Scotland to start out with a clean sheet.