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Would An Independent Scotland Be In The PIIGS?

14 March 2017 by Chris Bowie

During the 2010 euro bailouts and subsequent 2011 sovereign crisis, investors became so concerned about exposure to the euro bailout countries of Portugal, Ireland, Italy, Greece and Spain, that the acronym ‘PIIGS’ was coined. The most common question in meetings I had with investors during that period was “What is your PIIGS exposure?”.

Is it now time for the membership of PIIGS to change? It might just be, for two reasons:

Firstly, Ireland has made huge strides to improve its public finances, and now runs a respectably small budget deficit in the context of Europe as a whole – and don’t forget it was the first country to exit the euro bailout programme when it did so in 2013.

So which country  could replace Ireland? Well, as the graph below from today’s Telegraph shows, in the week where Nicola Sturgeon is pressing for a second “once in a generation” referendum (or is it a neverendum?) on Scottish Independence, an independent Scotland that was permitted EU membership (and let’s assume it was also a euro country) would rank very poorly in terms of its budget deficit – the worst in the EU in fact. Significantly worse.

The Deficit Surplus of EU countries as a proportion to GDP

Source: Telegraph, 14th March 2017,

While the UK itself does not look especially good in this context, it does highlight the perilous state of public sector finances in Scotland. Perhaps PIIGS should be renamed as PIGSS?



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