So if Scotland refuses to take it's share of the debt (about £100bn), Rest of the UK should be allowed to get back the assets to that value.
It isn't going to be an easy break up but as a British Citizen, if Scotland leaves then I hope Westminster plays hardball and doesn't roll over and give them everything they want. I'm sure people in Scotland will be thinking the opposite but I'm guessing "we're not taking on our share of the debt" immediately followed by "well we do want all of the following...." won't go down well.
"The UK Treasury says that should Scots vote to leave the UK, it will honour all UK government debt issued up to the date of Scottish independence. "
no its not
the UK made that statement to ensure no issues as far as the financial markets were concerned over the possibility of Scotland not paying its share of the debt , when Osborne made that statement he emphasised he still expected Scotland to pay its share of the debt in exchange for a share of the assets
'However, the Treasury, in addition to its guarantee, added that an independent Scotland would still be expected to pay its "fair share". '
Yes I did read that bit. And this is where its gets messy.
After Scottish independence, the UK Treasury will honour all UK debt . That means that in any independence negotiations, the Scottish government could say we are not going to be liable for any of the outstanding governments debts.
the UK made that statement to ensure no issues as far as the financial markets were concerned over the possibility of Scotland not paying its share of the debt , when Osborne made that statement he emphasised he still expected Scotland to pay its share of the debt in exchange for a share of the assets
The politicians won't have much choice. The electorate won't agree to it.
The electorate only get a choice once ever 5 years, and even then the politicians ignore what they want (e.g. Lib Dem personal pledges, Iraq war, top down reorganisation of the NHS etc).
Yes I did read that bit. And this is where its gets messy.
After Scottish independence, the UK Treasury will honour all UK debt . That means that in any independence negotiations, the Scottish government could say we are not going to be liable for any of the outstanding governments debts.
yes they could , and the UK government could turn around and say good luck running a country without any access to shared services or assets
financial markets could turn around and charge disproportionate rates for an independent Scotland to borrow money, something swinney has already said he would be doing
every action has a consequence and I think Scotland would come out a lot worse from this if the SNP carried through with this plan
"An independent Scottish state would become responsible for a fair and proportionate share of the UK's current liabilities, but a share of the outstanding stock of debt instruments that have been issued by the UK would not be transferred to Scotland. "
Now supposing a newly independent Scotland says, "we think a fair and proportionate share of the UK's current liabilities is £1 million".
It seems to be there are two issues here:
The UK government will honour all outstanding debt, regardless of negotations between the UK government and a newly independent Scotland.
The newly independent Scotland has just to show financial credibility if it's to be able to borrow any new money on the markets.
And who would you rather lend money to: the UK government or a newly independent Scottish government ?
The electorate only get a choice once ever 5 years, and even then the politicians ignore what they want (e.g. Lib Dem personal pledges, Iraq war, top down reorganisation of the NHS etc).
There's no way that the UK parliament could get away with signing the country up to a currency union with foreign countries (either Scotland or the Eurozone) without a referendum.All parties accept that a referendum would be necessary for Euro entry and creating an international Sterlingzone would be no different.
"An independent Scottish state would become responsible for a fair and proportionate share of the UK's current liabilities, but a share of the outstanding stock of debt instruments that have been issued by the UK would not be transferred to Scotland. "
Now supposing a newly independent Scotland says, "we think a fair and proportionate share of the UK's current liabilities is £1 million".
It seems to be there are two issues here:
The UK government will honour all outstanding debt, regardless of negotations between the UK government and a newly independent Scotland.
The newly independent Scotland has just to show financial credibility if it's to be able to borrow any new money on the markets.
in a negotiation they can say anything they want but as I said above i think this course of action would hurt Scotland more than it would the rUK and as a scot this sort of gamesmanship scares me tbh
Why should pointing out the legal ramifications of the Tory, LibDems and Labour's stance be harmful or arrogant?
What legal ramifications? We currently have a currency union with the UK by virtue of being a member of it. If we leave the UK we cease to be a member of the currency union as well, it isn't rocket science. Its not that long ago the Nats were hellbent on ditching sterling for Euro at the first opportunity, what changed? ;-)
If we walk away from our debt responsibilities then what confidence should the international markets have in us to honour any existing future debt? None. Not being able to borrow money at an affordable rate will cripple the newly formed Scottish state and force through immediate severe spending cuts. Its a simple as that.
Yes I did read that bit. And this is where its gets messy.
After Scottish independence, the UK Treasury will honour all UK debt . That means that in any independence negotiations, the Scottish government could say we are not going to be liable for any of the outstanding governments debts.
Any?
I presume that the new Scottish government will take all the liabilities for Scottish pensioners for example.
The problem would be setting up Day 1 without any access to capital markets. You can tax stuff in the future, but you haven't got any money now. You've just walked away from your debts (like Argentina) and thus any money will be higher interest rates - (think like Portugal)
There's no way that the UK parliament could get away with signing the country up to a currency union with foreign countries (either Scotland or the Eurozone) without a referendum.All parties accept that a referendum would be necessary for Euro entry and creating an international Sterlingzone would be no different.
Let's say that Scotland becomes independent next month. And decide to retain the Pound Sterling at its currency. Exactly how does the UK government stop a newly independent Scotland from continuing to use the £.
For instance, the Euro is used in Montenegro and Kosovo. Neither of which are in the EU.
Let's say that Scotland becomes independent next month. And decide to retain the Pound Sterling at its currency. Exactly how does the UK government stop a newly independent Scotland from continuing to use the £.
For instance, the Euro is used in Montenegro and Kosovo. Neither of which are in the EU.
the UK government haven't said it would stop an independent Scotland using the pound ...
Let's say that Scotland becomes independent next month. And decide to retain the Pound Sterling at its currency. Exactly how does the UK government stop a newly independent Scotland from continuing to use the £.
For instance, the Euro is used in Montenegro and Kosovo. Neither of which are in the EU.
The UK Government is not proposing to stop Scotland using the £
Let's say that Scotland becomes independent next month. And decide to retain the Pound Sterling at its currency. Exactly how does the UK government stop a newly independent Scotland from continuing to use the £.
For instance, the Euro is used in Montenegro and Kosovo. Neither of which are in the EU.
I don't think you have been paying attention. The UK can't do anything to stop Scotland using Sterling as it is an freely traded international currency. As you say Montenegro and Kosovo use the Euro while Panama, Cambodia and several other countries use the US Dollar - either as their sole currency or alongside their own worthless one.
However, Scotland wouldn't have any say in setting UK interest rates, no say over fiscal policy and they'd be no longer able to print Scottish bank notes denominated in Sterling. Kosovo and Panama don't print their own versions of Euros and Dollars, they just use the standard version bought on the international market. Also, the UK would have no legal responsibility to do anything to help out the Scottish economy. It may be practical to help out (as when the UK loaned Ireland money) but that would be down to whoever was in government at the time.
So, yes, Scotland could unilaterally use the Pound if it wanted but it's not a solution without drawbacks. No protection, no influence and you'd have to use "foreign" banknotes. That doesn't sound very independent to me.
It would make more sense to reintroduce the pre-Union Scottish Pound and have it pegged to Sterlihg initially to provide stability. That would give Scotland the option in future to either allow it to float freely or join the Euro eventually.
in a negotiation they can say anything they want but as I said above i think this course of action would hurt Scotland more than it would the rUK and as a scot this sort of gamesmanship scares me tbh
Agreed.
It seems to me that pro-indy folks want to have their cake and it eat too. They seem to think that a CU is the only way they will agree to take on any of the debt, but they also want their fair share of assets too. I am in disagreement on this because ultimately I think it comes down to what is fair i.e. we cannot go to rUK with demands that would be seen as onerous and indulgent. Yes voters seem to think that it is only fair if we push for something which we are in no position to bargain for, and it is maddening at times.
If Scotland votes Yes, this will be a messy divorce and very harmful for Scotland. The arrogance of the nationalists is embarrassing to every Scot.
The trouble with Alex Samond is he wants his cake and eat it - he wants to borrow what ever he wants, but to have the benefits of the pound (Look at Greece to see how that works out). He wants the pound and to be independent. He wants the benefits of what Scotland has borrowed, but not to pay for it. This is only going to end up with Scotland being in a worse financial position and unable to provide half of what he wants.
So if Scotland refuses to take it's share of the debt (about £100bn), Rest of the UK should be allowed to get back the assets to that value.
The obvious solution would be the tax revenue from existing oil deposits.
If the debt belongs to the UK, why not argue so does the oil?
Sir Paul Collier, Professor of Economics at the Blavatnik School of Government at Oxford University, said an independent Scotland would be entitled to only its UK population share of North Sea oil and gas revenue - 8% - and not its geographical share of 90% which the SNP Government insists it would be entitled to.
The electorate only get a choice once ever 5 years, and even then the politicians ignore what they want (e.g. Lib Dem personal pledges, Iraq war, top down reorganisation of the NHS etc).
It's fair to predict that the English electorate would never, ever forget or forgive this crass act of theft by the newly independent Scotland. No politician south of the border would ever stand a chance if they did not treat this as little short of an act of war.
If we walk away from our debt responsibilities then what confidence should the international markets have in us to honour any existing future debt? None. Not being able to borrow money at an affordable rate will cripple the newly formed Scottish state and force through immediate severe spending cuts. Its a simple as that.
It would also cut off any chance of Scotland being accepted as a member of any international organisation like the EU, NATO or any organisation concerned with international trade. There would be no possibility of help from the World Bank or any other lender.
Comments
Scottish finance secretary John Swinney's views are entirely consistent with those of the UK Treasury: http://www.bbc.co.uk/news/business-25707218
"The UK Treasury says that should Scots vote to leave the UK, it will honour all UK government debt issued up to the date of Scottish independence. "
People actually believe what Westminster politicians say!!!:o
There's a first time for everything;-)
It isn't going to be an easy break up but as a British Citizen, if Scotland leaves then I hope Westminster plays hardball and doesn't roll over and give them everything they want. I'm sure people in Scotland will be thinking the opposite but I'm guessing "we're not taking on our share of the debt" immediately followed by "well we do want all of the following...." won't go down well.
The politicians won't have much choice. The electorate won't agree to it.
no its not
the UK made that statement to ensure no issues as far as the financial markets were concerned over the possibility of Scotland not paying its share of the debt , when Osborne made that statement he emphasised he still expected Scotland to pay its share of the debt in exchange for a share of the assets
I suggest you read the following article
http://www.telegraph.co.uk/finance/economics/10567478/UK-guarantees-independent-Scotlands-debt.html
Yes I did read that bit. And this is where its gets messy.
After Scottish independence, the UK Treasury will honour all UK debt . That means that in any independence negotiations, the Scottish government could say we are not going to be liable for any of the outstanding governments debts.
Alex Salmond said at the time that Scotland would take on its share of the debt. Now his Party has reneged on that pledge.
The electorate only get a choice once ever 5 years, and even then the politicians ignore what they want (e.g. Lib Dem personal pledges, Iraq war, top down reorganisation of the NHS etc).
yes they could , and the UK government could turn around and say good luck running a country without any access to shared services or assets
financial markets could turn around and charge disproportionate rates for an independent Scotland to borrow money, something swinney has already said he would be doing
every action has a consequence and I think Scotland would come out a lot worse from this if the SNP carried through with this plan
I have read the article. This line interested me:
"An independent Scottish state would become responsible for a fair and proportionate share of the UK's current liabilities, but a share of the outstanding stock of debt instruments that have been issued by the UK would not be transferred to Scotland. "
Now supposing a newly independent Scotland says, "we think a fair and proportionate share of the UK's current liabilities is £1 million".
It seems to be there are two issues here:
The UK government will honour all outstanding debt, regardless of negotations between the UK government and a newly independent Scotland.
The newly independent Scotland has just to show financial credibility if it's to be able to borrow any new money on the markets.
And who would you rather lend money to: the UK government or a newly independent Scottish government ?
There's no way that the UK parliament could get away with signing the country up to a currency union with foreign countries (either Scotland or the Eurozone) without a referendum.All parties accept that a referendum would be necessary for Euro entry and creating an international Sterlingzone would be no different.
in a negotiation they can say anything they want but as I said above i think this course of action would hurt Scotland more than it would the rUK and as a scot this sort of gamesmanship scares me tbh
What legal ramifications? We currently have a currency union with the UK by virtue of being a member of it. If we leave the UK we cease to be a member of the currency union as well, it isn't rocket science. Its not that long ago the Nats were hellbent on ditching sterling for Euro at the first opportunity, what changed? ;-)
If we walk away from our debt responsibilities then what confidence should the international markets have in us to honour any existing future debt? None. Not being able to borrow money at an affordable rate will cripple the newly formed Scottish state and force through immediate severe spending cuts. Its a simple as that.
Any?
I presume that the new Scottish government will take all the liabilities for Scottish pensioners for example.
The problem would be setting up Day 1 without any access to capital markets. You can tax stuff in the future, but you haven't got any money now. You've just walked away from your debts (like Argentina) and thus any money will be higher interest rates - (think like Portugal)
Let's say that Scotland becomes independent next month. And decide to retain the Pound Sterling at its currency. Exactly how does the UK government stop a newly independent Scotland from continuing to use the £.
For instance, the Euro is used in Montenegro and Kosovo. Neither of which are in the EU.
the UK government haven't said it would stop an independent Scotland using the pound ...
it has said it wont enter into a currency union
The UK Government is not proposing to stop Scotland using the £
I don't think you have been paying attention. The UK can't do anything to stop Scotland using Sterling as it is an freely traded international currency. As you say Montenegro and Kosovo use the Euro while Panama, Cambodia and several other countries use the US Dollar - either as their sole currency or alongside their own worthless one.
However, Scotland wouldn't have any say in setting UK interest rates, no say over fiscal policy and they'd be no longer able to print Scottish bank notes denominated in Sterling. Kosovo and Panama don't print their own versions of Euros and Dollars, they just use the standard version bought on the international market. Also, the UK would have no legal responsibility to do anything to help out the Scottish economy. It may be practical to help out (as when the UK loaned Ireland money) but that would be down to whoever was in government at the time.
So, yes, Scotland could unilaterally use the Pound if it wanted but it's not a solution without drawbacks. No protection, no influence and you'd have to use "foreign" banknotes. That doesn't sound very independent to me.
It would make more sense to reintroduce the pre-Union Scottish Pound and have it pegged to Sterlihg initially to provide stability. That would give Scotland the option in future to either allow it to float freely or join the Euro eventually.
Agreed.
It seems to me that pro-indy folks want to have their cake and it eat too. They seem to think that a CU is the only way they will agree to take on any of the debt, but they also want their fair share of assets too. I am in disagreement on this because ultimately I think it comes down to what is fair i.e. we cannot go to rUK with demands that would be seen as onerous and indulgent. Yes voters seem to think that it is only fair if we push for something which we are in no position to bargain for, and it is maddening at times.
The trouble with Alex Samond is he wants his cake and eat it - he wants to borrow what ever he wants, but to have the benefits of the pound (Look at Greece to see how that works out). He wants the pound and to be independent. He wants the benefits of what Scotland has borrowed, but not to pay for it. This is only going to end up with Scotland being in a worse financial position and unable to provide half of what he wants.
The obvious solution would be the tax revenue from existing oil deposits.
If the debt belongs to the UK, why not argue so does the oil?
http://www.heraldscotland.com/politics/referendum-news/oxford-economist-cautions-against-north-sea-oil-grab.24053615
It's fair to predict that the English electorate would never, ever forget or forgive this crass act of theft by the newly independent Scotland. No politician south of the border would ever stand a chance if they did not treat this as little short of an act of war.
It would also cut off any chance of Scotland being accepted as a member of any international organisation like the EU, NATO or any organisation concerned with international trade. There would be no possibility of help from the World Bank or any other lender.