Scottish Government Bonds and Investing in Ourselves
Working Paper
William Thomson (Scotonomics) and Jim Osborne (Scottish Currency Group).
On November 13th, 2025, the Scottish Government published its plans for a Bonds Programme as an alternative to borrowing from the UK Treasury National Loan Fund (NLF) to fund capital investment. Between 2026 and 2030, the Scottish Government plans to raise £1.5 billion in international capital markets through a wholesale bond issuance.
Under the fiscal framework negotiated in 2023, the Scottish Government can borrow around £450 million each year, with an overall limit of no more than £3 billion outstanding debt. It can choose from whom and how it wishes to borrow for capital investment. Until now, the Scottish Government, like most other public bodies, has chosen to borrow from the NLF, primarily because the process is straightforward and familiarity has led to established habits.
The Scottish Government has identified that an alternative funding source could provide greater fiscal flexibility and diversify its sources of capital investment finance. Engagement with Scottish government officials responsible for the Bond Programme revealed that an option to issue “retail bonds” to the Scottish public was considered but rejected. Instead, a wholesale bond was chosen. The Scottish Government Bonds Programme: Summary Outline Business Case does not evaluate a retail bond issue.
This paper principally discusses the challenges and the decision to fund infrastructure investment through international capital markets rather than a retail bond offered exclusively to the Scottish public, credit unions, and/or Scottish institutions, specifically, Local Government Pension Schemes.
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SEND A NOTE TO YOUR MSP (please copy and edit and send to your MSP. Find their details here
Dear (INSERT THE NAME OF YOUR MSP)
After reading the Scotonomics and the Scottish Currency Group report “Scottish Government Bonds and Investing in Ourselves,” I am asking you to support their call for a pause in the Scottish Government’s wholesale bond programme.
The destination of the interest payments is my primary concern, as it results in an estimated and unnecessary £170 million flowing out of the Scottish economy. At a time of a heightened cost-of-living crisis, I believe that this money should instead support Scottish households and businesses. The author’s plans to replace the funding from the National Loans Fund with a Scottish Retail Bond or a Scottish-only institutional bond aimed at Local Authority Pension Schemes are pragmatic and should be investigated in full.
I am also worried about the continuing trend of this administration in supporting the sale of Scotland’s natural resources by encouraging foreign direct investment to own our vital assets. Quoting Scottish Government figures from 2023, the report highlights that, on average, £11.5 bn leaks out of the Scottish Economy each year as foreign firms repatriate profits. There is significant evidence that the wholesale bond programme will encourage further financial flows out of Scotland.
I encourage the Scottish Government to act in the spirit of the recent Community Wealth Building (Scotland) Bill and ensure that any new plan for government borrowing keeps as much money as possible in Scotland and supports the ownership of Scottish assets by Scots. The first step is to pause the bond programme until after the Holyrood election in May.
I trust I can count on your support.
Your sincerely
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About the authors of the report.
William Thomson is a political economist. He worked for almost a decade in the financial services sector in London, holding positions in the Commercial Departments at the British Bankers’ Association and the Council of Mortgage Lenders. William has an MA (Hons.) in European Studies, an MSc in The Green Economy, and an MEcon in the Economics of Sustainability. Based in Dunblane, William writes articles on economics in various publications, including The National, Brave New Europe, and the Scottish Left Review. He hosts the Scotonomics Podcast and curates Scotland’s Economics Festival.
Jim Osborne graduated in 1978 with a BA Honours Degree in Economics at Manchester University. He had a 28-year career in the Claims Division of Allianz UK, during which time he was also the Senior Trade Union Representative for 3,000 office staff for 20 years and a UK delegate to the Allianz European Works Council for 8 years. He also served as a member nominated pension trustee of the Allianz UK pension scheme for 7 years. He has had an active interest in the role of pension funds in the economy for over 25 years and has been a campaigner for pension reform since 2013. He has been a member of the Scottish Currency Group since 2020 and is a regular contributor to The National and Bylines Scotland.
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