For George McIntyre & James Sherville Alasdair Macfadyen Salmonds delight as UK promises to pay Scotlands debts SNP leader says his negotiating position is strengthened as Treasury reassures markets it will still pay debts if Scotland goes independent Mr Salmond said the idea that politics would overshadow the event was “nonsensical” Mr Salmond said the idea that politics would overshadow the event was “nonsensical” Photo: PA Matthew Holehouse By Matthew Holehouse, Political Correspondent2:43PM GMT 13 Jan 2014 Comments969 Comments Alex Salmond has welcomed the announcement that Britain will guarantee Scotland’s debts if the country becomes independent, saying it strengthens his hand in negotiations. The Treasury would continue to honour debts amassed by the UK if Scotland becomes independent, it was announced today. Any new Scottish state would then be required to pay a “fair and proportionate share” of those liabilities to the UK. It means if Scotland defaults, it will be taxpayers in the rest of the United Kingdom who will have to pay. Alex Salmond, the SNP leader, wants to be able to use pound sterling following independence – a suggestion George Osborne has rejected. Related Articles Ken Clarke rebuked by Downing Street for saying immigration acceptable 13 Jan 2014 Retirement age hike will result in employment disputes 06 Dec 2013 Treasury debt pledge about protecting UK 13 Jan 2014 But today’s announcement that the Westminster Government will be relying on any new Scottish state to make debt repayments has strengthened Mr Salmond’s negotiating position, the SNP leader said today. Mr Salmond has previously said Scotland would be entitled to refuse to take on a share of debt if the UK refused to share assets such as sterling. These documents make clear that 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, including the monetary assets, Mr Salmond said. Any market uncertainty in the gilts market has been caused by their own refusal to discuss the terms of independence before the referendum and it is their own insistence that Scotland would be a new state that lands them with the unambiguous legal title to the accumulated debts of the United Kingdom. That position is now beyond argument and todays announcement makes clear that Scotland would be in an extremely strong negotiating position to secure that fair deal. The announcement was made to reassure international investors that their money is safe whatever the outcome of this year’s referendum and keep interest rates low. Official statistics show public-sector gross debt stood at £1.38 trillion by the end of 2012-13. The interest costs Britain around £50bn a year and is expected to rise markedly over the coming decade. The Treasury paper states: 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. An independent Scottish state would become responsible for a fair and proportionate share of the UKs current liabilities, but a share of the outstanding stock of debt instruments that have been issued by the UK would not be transferred to Scotland. For example, there would be no change in counterparty for holders of UK gilts. Instead, an independent Scotland would need to raise funds in order to reimburse the continuing UK for this share. In the event of independence, the full spectrum of assets and liabilities - past, future and contingent - would need to be considered in negotiations between the continuing UK and Scottish Governments, on a case-by-case basis, the report states. This means that the negotiations would need to cover the arrangements for all forms of debt covered in this note, not just gilts and Treasury bills. Danny Alexander, the chief secretary to the Treasury, said the UK Governments new position should reassure the financial markets.
Posted on: Sat, 05 Apr 2014 10:22:12 +0000