The UK Government announced yesterday that it would continue to honour all of Britain’s £1.4trillion debts even if Scotland breaks away to become independent.
The Treasury said this was designed to reassure world markets and prevent them becoming jittery in the run-up to the historic referendum in September.
UK ministers also said an independent Scotland would have to pay its “fair share” of the debts. First Minister Alex Salmond reiterated his stance that Scotland would take responsibility for the debt, provided the nation secured a fair share of the UK’s assets in an independence deal.
He also claimed the Treasury’s announcement would leave the Scottish Government in an “extremely strong negotiating position”.
Danny Alexander, the chief secretary to the Treasury and Highland Lib Dem MP, said: “Everybody knows that an independent Scotland would be likely to face considerably higher interest rates, less credibility in the international finance markets.
“What we want to avoid is any sort of idea that the rest of the UK – taxpayers across the whole of the UK, including in Scotland between now and in September – pay any sort of separation surcharge, an extra cost on debt that causes uncertainty in the markets.”
Alistair Darling, leader of the pro-UK Better Together group, criticised the apparent conditions which the SNP was pinning on fulfilling Scotland’s responsibilities over the debt.
He said: “This is a sensible move by the Treasury to reassure international markets the UK will honour its debts regardless of the referendum outcome.
“Markets have been unnerved by Alex Salmond’s threats. He is playing with fire with his irresponsible threats to default on Scotland’s debts if he doesn’t get his way on currency.”
Speaking in Stirling yesterday, Scottish Secretary Alistair Carmichael claimed the cost of mortgages and business loans would have been affected if the Treasury had not promised to honour all UK Government debt.
The MP said interest rates could have crept up if the UK Government had not acted. He said: “There are a number of companies that take the debt from the government and sell it on and this is an issue they are finding coming up on the markets.
“You have a degree of nervousness in the markets because of the possibility of a future Scottish Government defaulting. We have made it clear that the UK Government is good for any debt that it had incurred.”
He said it would be “absolute madness” if the first act of a new country was to default on its share of national debt – a scenario reportedly outlined by Mr Salmond in the event of Scotland not being allowed to keep the pound.