Scottish Independence: Alex Salmond delighted as UK promises to pay Scotland's debts

 

Alex Salmond claimed a victory yesterday as the Treasury pledged, in the event of a Scottish vote to leave the union, to honour all UK government debt issued up to the date of Scottish independence.

Mr Salmond said the pledge had strengthened the bargaining hand of a future government north of the border.

"We remain prepared to negotiate taking responsibility for financing a fair share of the debts of the UK provided, of course, Scotland secures a fair share of the assets," the Scottish First Minister said, adding that the Treasury's announcement "makes clear that Scotland would be in an extremely strong negotiating position to secure that fair deal".

In order to reassure investors in Gilts ahead of the referendum on Scottish independence in September, and to avert the possibility of a damaging spike in market interest rates, the Treasury has promised to stand behind Britain's entire £1.3trn national debt.

The Treasury will continue to pay off all the claims, even after a "yes" vote in the poll. Negotiations over how much an independent Scotland would owe the rest of UK would take place following a vote, and the new Edinburgh government would be a debtor to London. An alternative approach, but one rejected as too risky, would have been an attempt to divide the existing debt stock between a newly independent Scotland and the remaining UK.

Despite Mr Salmond trying to generate political capital from the Treasury's announcement, it was described as a "sensible move" yesterday by the former Chancellor Alistair Darling, who leads the pro-union Better Together campaign. The Treasury also denied that the move benefited Mr Salmond's negotiating position on the future division of the UK's liabilities.

Mr Salmond has said that any trepidation in the bond markets over the safety of Gilts is a result of London's refusal to discuss the terms of independence before next autumn's ballot. The "yes" campaign is presently trailing in opinion polls, although the Secretary of State for Scotland, Alistair Carmichael, has warned against complacency over the September vote.

The Treasury said: "In the event of Scottish independence from the United Kingdom, the continuing UK government would in all circumstances honour the contractual terms of the debt issued by the UK government."

By 2016/17, when Scotland would be expected to secede, the UK's national debt is projected to hit £1.6trn.

Other economic matters to be negotiated in the event of a "yes" vote include whether Scotland will use Sterling. Mr Salmond said sharing a currency post-independence would be "common sense" but there would be complex negotiations about whether Scotland would be represented on the Bank of England.

Gilts by numbers

£1.3trn UK national debt today.

£1.6trn Projected debt in 2016/17 when Scotland could depart.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

Timeless drama of Championship race in league of its own - Michael Calvin

Michael Calvin's Last Word

Timeless drama of Championship race in league of its own
Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

The secret CIA Starbucks

The coffee shop is deep inside the agency's forested Virginia compound
Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

How the Establishment closed ranks over fallout from Nessie 'sighting'

The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
One million Britons using food banks, according to Trussell Trust

One million Britons using food banks

Huge surge in number of families dependent on emergency food aid
Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

2,500 years of history in 3,000 amazing objects

Excavation at Italian cafe to fix rising damp unearths trove
The Hubble Space Telescope's amazing journey, 25 years on

The Hubble Space Telescope's amazing journey 25 years on

The space telescope was seen as a costly flop on its first release
Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

Did Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
Apple's ethnic emojis are being used to make racist comments on social media

Ethnic emojis used in racist comments

They were intended to promote harmony, but have achieved the opposite
Sir Kenneth Branagh interview: 'My bones are in the theatre'

Sir Kenneth Branagh: 'My bones are in the theatre'

The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
The sloth is now the face (and furry body) of three big advertising campaigns

The sloth is the face of three ad campaigns

Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
How to run a restaurant: As two newbies discovered, there's more to it than good food

How to run a restaurant

As two newbies discovered, there's more to it than good food
Record Store Day: Remembering an era when buying and selling discs were labours of love

Record Store Day: The vinyl countdown

For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Usher, Mary J Blige and Will.i.am to give free concert as part of the Global Poverty Project

Mary J Blige and Will.i.am to give free concert

The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
10 best tote bags

Accessorise with a stylish shopper this spring: 10 best tote bags

We find carriers with room for all your essentials (and a bit more)
Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

Paul Scholes column

I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England