A pledge by the Treasury to honour all UK Government debt up to the date of potential Scottish independence stopped a hike in mortgages and business costs, the Scottish Secretary has claimed.
Alistair Carmichael said the intervention came after senior figures in the financial market expressed concern about the ability of Scotland to guarantee its share of UK debt in the event of a Yes vote in September.
An independent Scottish Government would become responsible for a share of current liabilities, according to a paper issued by the Treasury.
In the event of independence, a new contract would be needed between governments following extensive negotiations. There would be no change to UK-issued gilts, or bonds.
Speaking after a speech in Stirling, Mr Carmichael: “You have a degree of nervousness in the markets because of uncertainty of a future Scottish Government if that were to happen defaulting.
“What we have done is simply to step in and make it clear, by issue of a note, that the United Kingdom is good for any debt that it has incurred and that way we will hopefully maintain the stability that we have as part of the United Kingdom.”
When asked what impact the markets envisioned, Mr Carmichael said: “I think the suggestion was that if we hadn’t acted interest rates would have started to creep up.”
However, he denied the Treasury’s guarantee put the Scottish Government in a stronger position when it came to the negotiations that would take place if the country decides to go it alone and insisted it did not represent pre-negotiation “in any way, shape or form”.
The move means that rather than an independent Scotland owing the markets, it would have to pay back the rest of the UK for its share of public-sector debt.
First Minister Alex Salmond said the Treasury’s decision shows that UK ministers are coming to terms with “reality”.
The development is in line with predictions in the Scottish Government’s White Paper on independence.
“Any market uncertainty in the gilts market has been caused by their own refusal to discuss the terms of independence before the referendum, and it is their own insistence that Scotland would be a new state that lands them with the unambiguous legal title to the accumulated debts of the United Kingdom,” Mr Salmond said.
Prime Minister David Cameron’s official spokesman told a Westminster media briefing: “What the Treasury is doing today is providing clarification for investors.”