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‘Devastating impact’ of debt for rest of the UK
Division of UK public sector debt.
The Scottish Government has made clear that in the event of independence we will “negotiate with Westminster to agree a fair share of assets and liabilities that is fair, equitable and reflective of Scottish needs and those of the rest of the UK”
However, following the warnings from academic Prof Christine Bell of Edinburgh University that “if the remainder of the UK keeps the name and status of the UK under international law it keeps its liabilities for the debt”, Finance Secretary John Swinney has published an analysis of the implications such an approach by the UK Government would have for debt payments for the rest of the UK.
The paper shows that if the UK Government put itself in a position of having to accept all UK debts – which it has already accepted legal liability for – the rUK would be responsible for:
- Up to an additional £130 billion of debt,
- between £4 billion and £5.5 billion a year in additional interest payments, equivalent to increasing the basic rate of income tax in the RUK by one pence
Finance Secretary John Swinney said:
“The Scottish Government has consistently proposed that following a vote for independence we reach agreement with the rest of the UK on a fair share of assets and liabilities, including the Bank of England which holds a third of UK public sector debt.
“That is the fair, reasonable and responsible approach we continue to put forward. However, people in the rest of the UK deserve to know the logical consequences of the position the Westminster government are taking.
“The Treasury has claimed that the UK would be the continuing state with exclusive access to the role and responsibilities of the Bank of England. If you follow that argument to its logical conclusion then it is also responsible for the entire debt liability – which could mean the rest of the UK taking on additional debts of up to £130 billion.
"That would result in debt servicing costs of the rest of the United Kingdom increasing by between £4 billion and £5.5 billion each year – a devastating impact which would be the equivalent of increasing the basic rate of income tax by one pence.
“That would represent a significant and unnecessary cost to taxpayers in England, Wales and Northern Ireland when, as part of the proposals we have put forward, an independent Scotland would be quite happy to pay our fair share of UK debts as part of negotiated arrangements, which would include participation in a Sterling zone
“This is just one of the reasons, alongside the costs that rejecting a currency area would impose on business in the rest of the UK, that the Treasury will drop this bluff and bluster the minute the campaign is over.”