UK promises to guarentee Scotland's debt post independence

noodle_doodle

It's not paying debts post-independence, just guaranteeing them up to that point. Whether scotland takes on any of the debt afterwards is for negotiation, with assets and currencies in the bargaining mix

Graham_Devon

Well I have to admit, I'm not sure what's nonsense, a good move, a bad move.

All I do know is conflicting information is everywhere. Though more and more are suggesting this effects ALL of us, not just Scotland.

The telegraph is now leading with a story suggesting this would bump up our debt to GDP ratio by 10%, leading to our credit rating being in danger.

http://www.telegraph.co.uk/finance/economics/10569415/Scottish-independence-UKs-credit-rating-could-be-threatened-as-Treasury-guarantees-Scotlands-debt.html

Bond traders and economists welcomed the Treasury’s “clarification” that it would stand behind all Government-issued debt instruments in the event of full devolution. However, some warned that the UK’s debt to GDP ratio, which is already 76pc, would rise significantly - by about 10pc - which could alarm the rating agencies. The Treasury said an independent Scotland would have to pay for a “fair and proportionate share” of UK liabilities but that the amount would be worked out as a separate compensation scheme. But a “share of the outstanding stock of debt instruments that have been issued by the UK would not be transferred to Scotland”.

We just seem to have a lot of people, all with differing interests stating it's either a good or a bad thing dependent upon how it effects them.

Thrugelmir

UK retains the debt along with the oil and gas fields.

DaveTheMus

I live in Glasgow, most people I speak to are happy and proud to be British.....

I include myself in that....I'm a Glaswegian first, and British second.....

Loughton_Monkey

It strikes me that all this independence nonsense might go down as the biggest con trick in the world. "We want total independence from Uk, but we will keep the Monarch (so we don't have to bother with our own constitution), and we'll keep the British Pound (so we don't have to worry about world confidence in our currency), and now we won't take on our proportion of debts (so we can't go bust anyway)."

Smells extremely fishy to me. Rotten salmon and rancid sturgeon.

Once their bid fails, I assume they can be found guilty of treason and hanged.

michaels

Why does the debt belong to England and Scotland might get a share? Can't we say it belongs to scotland and England offer to take a few percent of it via negotiation?

If the RUK does decide to sub Scotland the money for its share of the debt then presumably we will charge them a market rate and make a profit on the turn

zagubov

michaels wrote: »

Why does the debt belong to England and Scotland might get a share? Can't we say it belongs to scotland and England offer to take a few percent of it via negotiation?

If the RUK does decide to sub Scotland the money for its share of the debt then presumably we will charge them a market rate and make a profit on the turn

I dunno what England's got to do with anything here. It's Scotland and the rUK. What's stopping England leaving at the same time as Scotland and saying the debt belongs to the rUK as well? Gets you out of the EU too apparently.:D

zagubov

Thrugelmir wrote: »

UK retains the debt along with the oil and gas fields.

DaveTheMus wrote: »

I live in Glasgow, most people I speak to are happy and proud to be British.....

I include myself in that....I'm a Glaswegian first, and British second.....

OK the banker's offering the you the debt, the oil, the gas and Glasgow. Deal or no deal?:D

Thrugelmir

Appears the announcement has more to do with the UK selling gilts and the interest rate that lenders will demand in the future. Than any particular concern for Scotland!

Generali

michaels wrote: »

Why does the debt belong to England and Scotland might get a share? Can't we say it belongs to scotland and England offer to take a few percent of it via negotiation?

If the RUK does decide to sub Scotland the money for its share of the debt then presumably we will charge them a market rate and make a profit on the turn

I worked out a couple of years ago that if you take the Scottish debt that the UK took on at inception (£300,000 from memory) and added compound interest at the BoE's base rate you got to roughly the UK's national debt!

In theory it would be feasible to charge a risk adjusted rate of interest on 'Scotland's' proportion of the debt. In practice probably not.

BTW, When on about the BoE remaining the Lender of Last Resort for Scotland, that doesn't mean that the BoE is on the hook for the Scottish banking system. It simply means that if a Scottish bank has a funding shortfall overnight, the BoE will lend money to them secured against Gilts. If the borrowing bank went bust the BoE would keep the bonds and would be highly unlikely to make a loss.