The announcement by the UK Treasury that it will take on sole responsibility for all of the UK’s national debt is at one level a simple acknowledgement of the obvious. The markets needed assurance that this debt would be repaid and they didn’t want any uncertainty about who would pay which bits of the debt. As the government at Westminster has consistently claimed that rUK would be the sole successor state, it had no option but to offer this reassurance to the financial markets.
So far so simple. However this acknowledgement is also a great boost to prospects for Scottish independence. For the same Treasury announcement also claims that it expects an independent Scotland to enter into an agreement with rUK whereby Scotland would take on its fair and proportionate share of the UK’s current liabilities. This fair and proportionate share would be repaid directly to the rUK treasury. The terms of this repayment would be negotiated in a separate contract between the two governments. Which they will do. The Scottish government has always stated that it will take on its fair share of UK debt in return for receiving its fair share of UK assets. So we can take it for granted that an agreement will be reached between rUK and an independent Scotland for sharing out both the debts and the assets.
The implications of this announcement go even further. In effect Westminster is acknowledging that there will be a sterling currency union and that Scotland will quickly and smoothly become a full member state of the EU. There will be no expulsion and no veto. The reason is quite simple. rUK will in future be dependent on an economically successful and stable Scotland. Without the debt repayments from Scotland, rUK would be in danger of defaulting on its debts. Which remember will be the debts of the whole of the former UK.
It thus becomes vital for the economic success of rUK that Scotland does well. Punishing Scotland would only serve to punish rUK. Thus I confidently expect that after a Yes vote rUK will rush to establish a sterling currency union and will lead the negotiations within the EU to confirm as quickly as possible Scotland’s continuing membership.
It is worth noting that this initiative of the UK treasury is pretty much in line with what the Scottish government has repeatedly proposed, most recently in their White Paper on independence. It is probably too much to hope that this common sense approach will be extended to other aspects of the independence negotiations. After all acting like an ostrich is not a very dignified position for the government of a major European state.