SPEAKERS CORNER…A satirical piece by franklyfrancophone
Scottish Government bonds are selling like hot cakes. After two weeks of controversy what the UK media are predictably referring to as tartan bonds were put on the market on Friday. They can be purchased by the general public through banks and other financial institutions. The bonds are of £1,000 at a 4.75% 1-year interest rate. The quantity on the market is worth £1,890 million, which can be increased to £2,500 million.
On the first day bonds to the value of about £1,000 million had already been purchased, confirming the attractiveness of this financial product. The financial entities selling them, a total of 23, are pleased with customer response. If this selling pace continues, the present bond emission will be sold out by Monday or Tuesday. The Scottish Government will then decide if it will increase the sum to £2,500 million in total, which is likely considering the high acceptance of the product and the difficulty in obtaining credit in international financial markets at the present time.
Citizens can buy a minimum of one bond at £1,000. They will cash the investment on November 21st 2011, getting back their money plus interest calculated at a rate of 4.75%. However, some financial institutions are charging commission for the service. Therefore, depending on the agency from which customers buy the bonds, the yield of the operation could be lower.
The opposition criticized the bond emission at first. Then it focused its criticism on the terms, claiming that a 4.75% interest rate is too high and jeopardizes the Government’s 2011 budget. The Scottish Government responded that this kind of budget-boosting operation is normal and that, at a time when the block grant has been drastically reduced by the UK government, it is of vital importance to increase the Scottish Government’s revenue in this way to ensure that damage inflicted on the Scottish economy by the UK state is minimized.
If only, if only. The above is, of course, a fiction, although it might be a true account if the Scottish Government were blessed with borrowing powers under the current devolution settlement. Unfortunately, it does not have such powers, which are, however, possessed by the Catalan Government, which is making full and effective use of them at this very moment.
“Economic and financial responsibilities for the Scottish Parliament – including real borrowing powers – were always a good idea so that we could optimize economic policy, as well as accountability at Holyrood. The CSR [UK Comprehensive Spending Review] demonstrates that these powers are now essential for the sake of jobs, opportunity and growth in the Scottish economy. They cannot solve the whole problem, but would enable us to prioritize growing our way out of the situation, instead of the Tory/Lib Dem priority of cuts which threaten to destroy growth.” (John McLaren, senior researcher, Centre for Public Policy for Regions, in The Herald, October 24th 2010)
This article is reproduced courtesy of franklyfrancophone: http://franklyfrancophone.wordpress.com/