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| Treasury promises to honour UK debts up to date of Scottish referendum | Treasury promises to honour UK debts up to date of Scottish referendum |
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| The Treasury will promise to honour all UK debts up to the date of Scotland's independence referendum in an effort to reassure investors and stop interest rates rising. | The Treasury will promise to honour all UK debts up to the date of Scotland's independence referendum in an effort to reassure investors and stop interest rates rising. |
| The Treasury statement, issued on Monday morning, is designed to head off anxieties about the risks that an independent Scotland could refuse to pay its share of the UK's £1.4tn debt mountain in a quarrel over sharing sterling. | The Treasury statement, issued on Monday morning, is designed to head off anxieties about the risks that an independent Scotland could refuse to pay its share of the UK's £1.4tn debt mountain in a quarrel over sharing sterling. |
| Alex Salmond, the first minister, has repeatedly linked post-referendum negotiations on sharing the UK's debt with his demands for a new sterling currency union, warning that without a deal on sterling, Scotland might refuse to pay its share of historic UK debt. | Alex Salmond, the first minister, has repeatedly linked post-referendum negotiations on sharing the UK's debt with his demands for a new sterling currency union, warning that without a deal on sterling, Scotland might refuse to pay its share of historic UK debt. |
| The first minister has said an independent Scottish government would service its share of UK debts in a legal agreement with the Treasury as long as a future UK government accepted that Scotland had a right to continue using sterling and a fair share of other UK assets. | The first minister has said an independent Scottish government would service its share of UK debts in a legal agreement with the Treasury as long as a future UK government accepted that Scotland had a right to continue using sterling and a fair share of other UK assets. |
| Treasury ministers fear those threats will make government borrowing before the referendum more expensive, and Alistair Darling, the former Labour chancellor, said on Monday that they could force up interest rates, mortgages and borrowing for businesses and consumers. | Treasury ministers fear those threats will make government borrowing before the referendum more expensive, and Alistair Darling, the former Labour chancellor, said on Monday that they could force up interest rates, mortgages and borrowing for businesses and consumers. |
| The Treasury statement said the UK government would "in all circumstances honour" the terms of all its debts agreed before the referendum, regardless of whether it and a future Scottish government reached a deal on how to repay Scotland's share. | The Treasury statement said the UK government would "in all circumstances honour" the terms of all its debts agreed before the referendum, regardless of whether it and a future Scottish government reached a deal on how to repay Scotland's share. |
| In a significant move, it revealed that the Treasury, rather than transferring Scotland's share of the UK's debt after independence to a new Scottish exchequer, would continue to control and service all the UK's current debts, including Scotland's share after independence. | In a significant move, it revealed that the Treasury, rather than transferring Scotland's share of the UK's debt after independence to a new Scottish exchequer, would continue to control and service all the UK's current debts, including Scotland's share after independence. |
| Instead, Scotland would be expected to reimburse the Treasury for its share of the debt and "would need to raise funds" to do so. | Instead, Scotland would be expected to reimburse the Treasury for its share of the debt and "would need to raise funds" to do so. |
| Treasury officials said they and the UK's Debt Management Office had been approached by investors seeking reassurances about the status of UK gilts because of the referendum. | Treasury officials said they and the UK's Debt Management Office had been approached by investors seeking reassurances about the status of UK gilts because of the referendum. |
| The markets are not, however, showing signs of significant anxieties about September's vote, because opinion polls are consistently showing support for independence at about a third of Scottish voters. | The markets are not, however, showing signs of significant anxieties about September's vote, because opinion polls are consistently showing support for independence at about a third of Scottish voters. |
| Its decision to offer a "cast-iron" guarantee could be seen to weaken the Treasury's hand in post-referendum negotiations, by appearing to cushion Scottish ministers from the risk of defaulting on their share of the debt. | Its decision to offer a "cast-iron" guarantee could be seen to weaken the Treasury's hand in post-referendum negotiations, by appearing to cushion Scottish ministers from the risk of defaulting on their share of the debt. |
| However, one Treasury source argued that its pledge strengthened the UK government's hand by showing it was taking a responsible position, regardless of the outcome of post-referendum talks. | However, one Treasury source argued that its pledge strengthened the UK government's hand by showing it was taking a responsible position, regardless of the outcome of post-referendum talks. |
| "We don't think it weakens our hand," said a Treasury source quoted in the FT. "If Scotland reneged on what it owed the rest of the UK, it would be an international pariah in the markets. The UK has a strong hand here." | "We don't think it weakens our hand," said a Treasury source quoted in the FT. "If Scotland reneged on what it owed the rest of the UK, it would be an international pariah in the markets. The UK has a strong hand here." |
| The Treasury also refused to set out what it would say and do on sharing the debt, or on sharing or dividing up other UK assets – including sterling – before the referendum. | |
| The statement added: "An entirely separate contract between the continuing UK government and an independent Scottish state's government would need to be established. The respective shares of debt and the terms of repayment would be subject to negotiation. | The statement added: "An entirely separate contract between the continuing UK government and an independent Scottish state's government would need to be established. The respective shares of debt and the terms of repayment would be subject to negotiation. |
| "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. 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." | "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. 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." |
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