Salmond plays his favourite game

The Treasury has vowed to honour its debts in the event of an independent Scotland, reports Piper Terrett. But the real debate has yet to begin.

Economists have welcomed the Treasury's pledge to foot the bill for all of Britain's sovereign debt regardless of a yes' vote for Scottish independence while Scottish first minister Alex Salmond called it "common sense". But it is just "a statement of the bleedin' obvious", says Robert Peston on"All £1.4trn of it" is the National Loans Fund's obligation and "nothing can change that".

So why make the announcement? Because investors have asked for clarification on what would happen if the union breaks up. The uncertainty could have pushed Westminster's borrowing costs higher.

You might think, who would not vote for independence, if Scotland would be free of UK debt currently 76% of GDP? The snag, says Peston, is that Salmond wants to keep a share of the debt so he can renegotiate ownership of assets such as North Sea oil and keep the pound.

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Not to mention that "if Scotland were seen to be repudiating all UK debts, investors might be very reluctant to lend even a brass farthing to it as an independent state".

Salmond is now in a position to play his favourite game: "making demands", says The Daily Telegraph. The confusion over the debt shows why a break-up would be "complex and foolhardy" the UK government's hand was forced by the need to prevent market panic.

But while the Treasury had no alternative, this isn't a victory for Salmond, says Philip Aldrick in The Times. He knows that "a newly independent Scotland would never have been able to raise a third of its GDP from the debt markets overnight at an acceptable interest rate". And he hasn't had it all his own way either.

While the Scottish Nationalist Party estimates Scotland's share of the debt will be £100bn in 2016-2017, based on its contribution to public finances, the Treasury points to a calculation based on gross debt around £153bn. The "real debate" is yet to start: that's when the politics will "start to get interesting".

It's not "a big win" for Salmond, agreed The Scotsman. His claim that the Treasury's decision reinforces Scotland's request to be part of a UK sterling zone' looks "fanciful"; the Treasury's statement says nothing of how a fiscal stability agreement could work. The decision Scots voters have to make later this year has just "gained a harder edge".

Piper Terrett is a financial journalist and author. Piper graduated from Newnham College, Cambridge, in 1997 and worked for Germaine Greer and for Adam Faith’s Money Channel before embarking on a career in business journalism. 

She has worked for most top financial titles, including Investors Chronicle, Shares magazine, Yahoo! Finance and MSN Money. She lectures part-time at London Metropolitan University and is the author of four books.