Scottish independence: John Swinney says 'No currency, no debt'

john swinney Finance Secretary John Swinney said Scotland keeping the pound was the preferred option

Finance Secretary John Swinney has confirmed Scotland will not pay its share of the UK debt if it does not get a currency union after independence.

The Scottish government minister told a BBC referendum debate if the UK seized all the assets of the currency it must also take all the liabilities.

Scotland's share of UK debt would be in the region of £100bn.

Former Lib Dem leader Charles Kennedy said defaulting would hurt an independent Scotland from day one.

Labour, the Lib Dems and the Conservatives have ruled out a currency union but this has been dismissed as pre-referendum posturing by the SNP.

They insist Scotland will keep the pound with the backing of the Bank of England.

In January, the UK Treasury said that, should Scotland vote to leave the UK, it would honour all UK government debt issued up to the date of Scottish independence.

The move was designed to assure international investors that the UK would not default on its debt if Scotland were to leave the union.

However, the Treasury added that an independent Scotland would still be expected to pay its "fair share" of the £1.4 trillion UK debt.

During Monday night's BBC referendum debate, Scotland's First Minister Alex Salmond said: "If you deny us the financial assets then the UK will get stuck with all the liabilities."

panel The panel for the referendum debate was Joyce MacMillan, Johann Lamont, John Swinney and Charles Kennedy

Asked on the latest BBC Scotland referendum debate if walking away from the debt was the "firm position" of the Scottish government, Mr Swinney said: "Alex Salmond said last night in the debate that our preferred option was a currency union in which we would take our fair share of the debt that has been built up over time.

"But if the UK is going to seize the assets then it is welcome to all the liabilities and we won't be having any of them if that is how the UK behaves."

During the debate at Leith Academy, Scottish Labour leader Johann Lamont said Scotland would be able to use the pound after independence but only on terms which are referred to as sterlingisation.

That would mean using the pound without the backing of a central bank.

Charles Kennedy Charles Kennedy warned against defaulting on debt

Ms Lamont told Mr Swinney she had previously said Scotland could not use the pound because: "I could not possibly conceive that anyone who was serious about protecting public services in Scotland would want to have sterlingisation."

Mr Kennedy agreed that Scotland could still use the pound after independence even if it did not have a formal union with the rest of the UK.

He said: "You can call it what you like so let's call it a pound. But it is pound that is not backed by a central bank. So if there is a run on the pound, unlike today, you are stuffed."

The former Lib Dem leader added: "Alex Salmond made clear if they don't give the union that his idea of negotiation we would not shoulder our bit of the debt.

"If you did not do that, on day one of an independent Scotland, never mind London and the terrible people down there, the international markets would have you for breakfast lunch and dinner."

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