CHICAGO Scotland will probably be able to borrow at rates "no worse" than London if Scots approve a referendum to secure independence from Britain in two years, Scotland's first minister Alex Salmond said in an interview in Chicago on Friday.
"The essence of what people normally do in these circumstances is to look at the balance sheet of the country," said Salmond, who is in Chicago to promote Scotland as a destination for U.S. corporate investment.
"Our balance sheet is a bit better than the U.K.'s ... it's not as if we wouldn't have a budget deficit right now, it's just that our position would be better than the U.K.'s."
In addition to what he called a superior immediate fiscal position, Scotland's oil and gas reserves represent future profits that would also be attractive to bond investors, he said.
Asked if that means Scotland might be able to borrow even more cheaply than London, Salmond demurred.
"Certainly it would be no worse rate, let's put it that way," he told Reuters.
A STERLING IDEA
The leader of the pro-independence Scottish National Party (SNP) also said he does not expect Scotland, which plans to keep using the British pound sterling after independence, to face the same kinds of problems that have dogged some members of the euro zone.
Greece's membership in Europe's shared currency, for instance, has prevented it from using currency devaluation as a solution for its soaring borrowing costs.
"The problem of the euro zone is the divergent productivity of the industry" of member countries, Salmond said.
Greece and Germany are separated by a 40 percent difference in productivity, he said.
"There is no productivity difference between Scotland and England."
Salmond said that joining the euro would not be on the table "for the foreseeable future."
Instead, Scotland plans to continue to share London's currency, and rely on the Bank of England both for financial regulation and monetary policy, he said.
Scotland's referendum on independence, scheduled for autumn in 2014, would give the country full control over its tax base and spending, Salmond said.
Should Scotland's post-independence policies prove so successful that Scotland's unemployment rate dives and the economy threatens to overheat, being bound to the monetary regime of the Bank of England would not be a liability, Salmond said.
While Scotland would not be able to tighten monetary policy in response, the nation could rely on the levers of fiscal and immigration policy to cool off the economy, he said.
(Editing by Jan Paschal)