THE PRIME Minister’s spokesman has denied that a Treasury note, confirming the UK would guarantee all national debt even if Scotland became independent, was issued as a result of concern from bond markets.
The note, published yesterday, stated that in the event of a vote in favour of independence: “The continuing UK government would in all circumstances honour the contractual terms of the debt.
“An independent Scotland would need to raise funds in order to reimburse the continuing UK for this share.”
The Prime Minister’s spokesman said the note provided clarity for investors, but refused to be drawn on whether it was a result of pressure from the markets. Asked if the note weakens the UK’s negotiation power on independence he added: “I don’t accept that, no.”
The move prompted delight from Scottish National Party leader Alex Salmond, who said the case for independence had been given a boost. “Any market uncertainty in the gilts market has been caused by their [the government’s] 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 today’s announcement makes clear that Scotland would be in an extremely strong negotiating position to secure that fair deal,”he added.
Economist Richard Holt, of Capital Economics, said the UK is still in a strong position.
Writing in City A.M today he said: “The Scottish government would surely accept less than ideal terms as the price to pay for a decent credit rating, an easy entry to the EU, a smooth transition to independence, and a sterling currency zone.”