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 BBC.co.uk."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.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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".
-
Coventry Building Society bids £780m for Co-operative Bank - what could it mean for customers?Coventry Building Society has put in an offer of £780 million to buy Co-operative Bank. When will the potential deal happen and what could it mean for customers?
-
Review: Three magnificent Beachcomber resorts in MauritiusMoneyWeek Travel Ruth Emery explores the Indian Ocean island from Beachcomber resorts Shandrani, Trou aux Biches and Paradis
