The British government is fighting dirty in its bid to win next September's referendum on Scottish independence, with a new Treasury report calling Caledonia Cyprus without the beaches or Turks.
An independent Scotland would have a vastly oversized financial sector that would leave it vulnerable to a Cyprus-style banking crisis, Britain's finance ministry says….
"An independent Scotland would have an exceptionally large banking sector compared to the size of its economy - with banking assets of more than 1250 percent of Scottish GDP - making it more vulnerable to financial shocks and the volatility of the sector," said a Treasury statement which contained excerpts from the report, due to be published on Monday….
At 12-1/2 times the size of Scotland's economic output, Scotland's banking sector would be even more out of proportion to the economy than that of Cyprus, which ground to a standstill earlier this year as the cost of recapitalising its banks, which had assets worth nine times its GDP, spiralled.
"Overall, the experience of financial crises shows that countries with a large banking sector compared to the size of their GDP are significantly more vulnerable," the Treasury statement said.
Scotland currently benefits from the British government's capacity to support struggling banks.
How ever will Scotland's pro-independence government respond to such a serious charge? With an unsupported assertion and promises of possible evidence, that's how!
"An independent Scotland will be an economic success story, as we will outline this coming week, and the tall tales from the Treasury can't hide that reality," said Scottish Finance Secretary John Swinney of the SNP.
Independent Scotland open to Cyprus-style bank risks, says Britain [Reuters]
Scottish independence: Treasury claims savers would not be protected [BBC]
U.K. Treasury Says Independent Scotland Couldn't Aid Banks [Bloomberg]