In your briefing today:

📣 Israel goes to the polls today in what’s being regarded as the most consequential elections in its history: the first since the Hamas terror attacks of 7 October 2023 and Israel’s subsequent destruction of Gaza, and a poll thus vital in determining both the future of Israel, and the wider Middle East.

Most polls show prime minister Benjamin Netanyahu’s current coalition losing its majority after three years of war, with an array of opposition parties looking to remove him from power. His main rival is former military chief Gadi Eisenkot, who lost both his son and two nephews in Gaza, and is seen to have both strong security credentials and a more liberal outlook than Netanyahu.

There’s very unlikely to be one, outright winner - that’s never happened. It could take weeks for a ruling coalition to be pieced together. (AP) (Live coverage: Guardian)

📣 Scotland faces a third weather warning in as many days, and even as communities continue the clean-up - and seek to get their electricity back on - after Storm Boelo at the weekend. A yellow wind warning covers most of Scotland until 9pm tonight. (BBC)

📣 AI giant Anthropic, makers of the Claude chatbot, has filed for an initial public offering which could raise as much as $100 billion next month, and value the company - formed by a group of disaffected OpenAI engineers in 2020 - at $1.5 trillion.

Were it to raise that much, it would comfortably eclipse the last mega IPO - that of SpaceX earlier this year, which raised $75 billion. The huge sums involved will inevitably raise concerns we’re headed for an almighty popping of an “AI bubble” which could harm the global economy.

The company’s prospectus lays bare “the extremes of the multi-trillion-dollar AI boom business model,” reports Bloomberg: “extraordinary growth paired with uncertainty about demand and the spending required to continue developing the technology.” (Bloomberg)

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📣 The UK government’s energy company, GB Energy, may be based in Aberdeen… but many of its most senior staff won’t be. (Times)

📣 Campaigners want the fire-ravaged Mackintosh Building at the Glasgow School of Art to be restored by a new, independent body. (BBC)

📣 Vinyl Villains, the legendary Edinburgh record store, is to close in the New Year, as the owner retires after more than 40 years. (Scotsman)

📣 Chancellor John Healey will remove taxes on more than 100 products ahead of the budget tomorrow, in an attempt to cut the cost of living. (BBC)

📣 There’s been a sharp rise in sales of essential goods after the government called for people to stock up in cases of a crisis, retailers have reported. (BBC)

📣 Rap star and mogul Jay-Z has booked himself for the next NFL Super Bowl halftime show - he’s been advising organisers on the show since 2019. (CNN)

⚽️ Harry Kane won the Ballon d’Or last night, crowned the greatest footballer in the world this year and the first Englishman to win it in 25 years. He had the support of Scotland’s sole juror, John Greechan: he explains his choice today. (The Scotsman)

🏉 The prospect of the Rugby World Cup has shaped the Scotland squad for the Nations Championship, with some promising younger players left out in favour of tried-and-tested options. (Scotsman)

⚽️ Brendan Rodgers left Celtic a year ago: Celtic remain in recovery mode, writes Michael Gannon (Daily Record)

⚽️ Hearts chairman Calum Paterson says the club will “never forget” the scenes at Parkhead on the last day of last season, and has called for greater transparency from football authorities. (Daily Record)

🗣️ When Chancellor John Healey sits down tomorrow, having delivered his first budget, your post-budget bingo card should certainly have “How are the markets reacting?” as one of the first questions TV news hosts will ask.

The reaction of the bond markets - where £3 trillion of the UK’s debt is traded, and to which we are increasingly in hock - is seen as a vital verdict on the Chancellor’s proposals. It’s been that way since the bond markets did for Liz Truss after her disastrous “mini budget” raised the UK’s borrowing costs to an all-time high.

Crucially, more expensive government bonds mean less money for the government to spend, more expensive mortgages for us, and less money for businesses to invest.

The bond market reaction will resonate in Scotland too. Because, at some point in the next few months, the Scottish government plans to launch its own bonds - its first in centuries.

As The Wall Street Journal reminded us last year, the last time Scotland went to the capital markets, “it didn’t work out too well”: it borrowed to fund the Darién Scheme. Its collapse wrecked the Scottish economy, propelling the country into the Union with England.

Nobody expects the next “Kilts” issue - as the bonds have been nicknamed, to distinguish them from UK “gilts” - to be anything like as dramatic.

For a start, the stakes will be low: the Scottish Government plans to raise only £1.5 billion in debt. That sounds a lot, but it’s only .5% of Scotland’s annual budget. The money will be directed towards better infrastructure. What would that buy? Well, as a rangefinder, a “comprehensive” four-tunnel link between the Shetland Islands, to replace the ferries, would cost about £1.5 billion.

Second, we won’t pay much more than the UK does for this new debt.

When John Swinney announced the plan this time last year, he was happy Scotland shared the same investment-grade credit rating as the UK. “The Scottish government’s high credit ratings are testament to Scotland’s strong institutions, track record of responsible fiscal management and pro-business environment,” he said at the time.

Credit rating agency Moody’s echoed that, saying the SNP had demonstrated “prudent financial management”.

But in truth, the price Scotland pays for its debt isn’t entirely due to Scotland’s choices. It also benefits from a backstop - the UK. Lenders would expect the UK to bail them out if Scotland defaulted, as this paper from the non-partisan Scottish Council on Global Affairs explains.

London’s choices, therefore, could significantly affect the Kilt’s price.

Healey will want to keep the bond markets sweet - the UK is already paying the highest interest rates for its debt in 28 years. It doesn’t want to make things worse.

But the arrival of the Kilt could still change Scottish politics by bringing bond-market dynamics into our debates. That currently small Scottish premium - the extra cost over UK borrowing - could go up or down, and it’s likely to move on the basis of opinion polls.

It’ll go up if traders see determined moves toward independence (they’ll see more risk in a small, newly independent country). And it’ll go down if the chances of independence fade.

For those of us watching, the point is: we have a number attached to the chance of independence, and a price. “Ratings agencies and investors will be actively monitoring Scotland’s politics now,” points out Dr Ben Cormier, a lecturer in the Department of Government and Public Policy at the University of Strathclyde, in that paper for the SCGA.

“Their views on political trends will be evident in Kilt price movements. Whether voters care about these market views, and how they respond, could affect the outcome in any future referendum.”

Bond prices are questions nations deal with all the time, but the interesting thing is they’re being introduced to our national debate by the party of government which wants - but has yet to secure - independence.

The Kilts could prove to voters that, as Swinney says, Scotland is big and clever enough to make its own way. Or, by adding an easily-tracked price to independence, they could put off uncertain voters. Either way, Kilts could once again directly affect Scottish politics, for the first time in 325 years.

Tomorrow, the Chancellor’s words will help determine whether they get off to a good start.

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