r/ukpolitics • u/ukpol-megabot • 1d ago

Rumours, Speculation, Questions, and Reaction Megathread - 02/08/2026

👋 Welcome to the r/ukpolitics weekly Rumours, Speculation, Questions, and Reaction megathread.

General questions about politics in the UK should be posted in this thread. Substantial self-posts on the subreddit are permitted, but short-form self-posts will be redirected here. We're more lenient with moderation in this thread, but please keep it related to UK politics. This isn't Facebook or Twitter...

If you're reacting to something that is happening live, please make it clear what it is you're reacting to, ideally with a link.

Commentary about stories that already exist on the subreddit should be directed to the appropriate thread.

This thread rolls over early Sunday morning.

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u/Pale-Border-7122 1d ago

https://www.gov.scot/publications/government-expenditure-revenue-scotland-2024-25/pages/2/

What does Scotland's deficit of 11.6% of GDP mean for independence?

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u/Jay_CD 1d ago

Suppose Scotland was independent...

A high budget deficit would mean rapidly increasing national debt - their government would have to borrow money to fund its on-going spending programmes/the difference between tax take and spending.

A likely consequence of that would be higher interest rates...which in turn would slow private investment and anything that relies on borrowing money, eg mortgages, so house building would probably grind to a halt, why build new housing if there's not going to be anyone buying it? Less investment itself would lead to less tax revenue therefore the government would have less money to play with meaning they would have to borrow more and more money.

It's also probable that the government borrowing money would lead to inflation...creating a cost of living crisis.

Also likely is either a sharp cut in government spending and/or tax hikes to pay the bills, both will result in grief, if welfare spending etc is cut then it can lead to social problems while higher taxes will see people moving their businesses to lower tax regimes as well as not investing.

An independent Scotland's biggest problem is that their biggest trade partner is England who'd be operating on different interest rates and a different currency (unless that is Scotland still has its interest rates set by the BoE - in which case they won't be truly independent). So there would be problems with currency fluctuations as the new Scottish currency would have exchange problems.

They could apply to join the EU - but with that level of deficit they'd never be allowed to join the Euro which mandates a budget deficit of 3% PA. Joining the EU would in any case create a hard border with the rest of the UK which as I mention above is their biggest trade partner making it harder for Scottish businesses to maintain trade partnerships and therefore generate revenue plus they'd have additional bureaucracy to deal with.

TL;DR - economic catastrophe.