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.
- 1 The BBC has just done more to eradicate ‘terrorism’ than all our wars since 9/11
- 2 Dog thinks owner is drowning in lake, dives in and tries to pull him out
- 4 Chilling drone footage captures Auschwitz ahead of 70th anniversary of liberation
- 5 Phil Neville backtracks on Tomas Rosicky 'I'd smash him' comments from Match of the Day 2
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Greece elections: Greek PM Alexis Tsipras takes aim at 'neo-liberal' Europe as country gears up for prolonged austerity battle
Auschwitz liberation 70th anniversary: Woman sent to three Nazi death camps describes surviving gas chamber
Pornhub star Mia Khalifa receives death threats after being ranked the site's top adult actress
Prince Philip set to be knighted by Australia: Celebrate by reading his greatest gaffes
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
Islamic history is full of free thinkers - but recent attempts to suppress critical thought are verging on the absurd
Leaked documents show Ukip leaders approve NHS privatisation once it becomes more 'acceptable to the electorate'
iJobs Money & Business
£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...
£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...
£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...