Scotland could issue own bonds if it keeps UK union

Reuters, Friday 22 Jun 2012

Westminster treasury head makes bond offer in latest move to stifle Scottish independence

Scotland could issue its own bonds, British Treasury minister Danny Alexander said on Friday, part of government efforts to devolve more power to Edinburgh to dampen calls for outright Scottish independence.

The devolved Scottish parliament, led by the Scottish National Party (SNP), runs most of Scotland's domestic affairs, but currently relies on a grant from the UK government to fund much of its spending.
The SNP last month launched its campaign to end Scotland's 305-year-old union with England through a referendum in 2014.
According to a consultation paper launched by Alexander in the Scottish city of Glasgow, Scotland could borrow up to 2.2 billion pounds ($3.4 billion) a year through bonds from 2015, while still part of the union.
The document's launch follows the government's announcement this week that it would scour all its departments and enlist experts, academics and think tanks to produce evidence to show Scotland was better off remaining part of the United Kingdom.
"I'm pleased to launch this consultation in Glasgow today, looking at both the benefits and disadvantages of Scottish ministers being able to issue their own bonds," Alexander said.
"This takes forward the commitments we made in the Scotland Act, which represented the greatest transfer of powers from Westminster for 300 years," he added.
The SNP says an independent Scotland would be better off financially and better placed to pursue its own interests. Britain's London-based main political parties argue independence would weaken both England and Scotland.
Questions over how Scotland would manage its economy have cast doubts on the viability of the independence plan.
SNP leader Alex Salmond has said an independent Scotland would keep Britain's sterling currency, but would decide its own fiscal policies. Critics say monetary union without fiscal union raises the prospect of euro zone-style instability.
In March, Salmond proposed a fiscal stability pact with the rest of Britain to address those fears.
Speculation and haggling over Scottish independence have risen in recent weeks, with media reports that the SNP is poised to drop its opposition to joining NATO, and also renewed debate on the wording of the proposed referendum question.
The SNP wants to ask: "Do you agree that Scotland should be an independent country?"
Critics say the question makes no mention of Scotland's exit from the United Kingdom, and should also ask if people disagree with independence.
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