England to take on ALL of Scotland's debts if voters back independence (then Salmond will be asked to take his 'fair share') Treasury guarantees all £1.4billion in debt over fear of interest rise Move to reassure bond markets about who will repay what the UK owes Alex Salmond insists he will take on a share, but wants to keep the pound England would be forced to guarantee all of Scotland's debts if voters back independence under an extraordinary deal announced today. The Treasury moved to end uncertainty on the financial markets which risked a rise in interest rates by saying if the Scotland leaves the UK, the remaining countries would accept all UK debt of £1.4billion. Talks would then begin with Scottish First Minister Alex Salmond to take on a "fair and proportionate" share of historic debts, which he will only accept if Scotland can continue to use the pound. First Minister Alex Salmond has insisted he will only take on a share of the UK's debt if an independent Scotland can keep the pound Downing Street was forced to deny today's announcement handed the independence campaign a huge coup by saying to voters in September's referendum that if Scotland goes it alone it could walk away from the UK's debt pile. A spokesman insisted the move was designed to provide reassurance to investors looking to buy gilts, or government debt, this year. It was feared that global investors would turn their back on the UK if there was uncertainty about who would take responsibility for the repaying the debt if Scotland became an independent country. The Treasury paper published today said: "In the event of Scottish independence from the United Kingdom, the continuing UK Government would in all circumstances honour the contractual terms of the debt issued by the UK Government. An independent Scottish state would become responsible for a fair and proportionate share of the UK's current liabilities. Treasury minister Danny Alexander said the move was designed to provide certainty to the bond markets However gilts sold by the UK would not be transferred, instead an independent Scotland "would need to raise funds in order to reimburse the continuing UK for this share." Treasury Secretary Danny Alexander, who is an MP in Scotland, said the UK Government's new position should reassure the financial markets. "We want to make sure people who lend us money continue to do so at very low interest rates," he told BBC News. Everybody knows that an independent Scotland would be likely to face considerably higher interest rates, less credibility in the international finance markets. What we want to avoid is any sort of idea that the rest of the UK - taxpayers across the whole of the UK, including in Scotland between now and in September - pay any sort of separation surcharge, an extra cost on debt that causes uncertainty in the financial markets. But an independent Scotland would still be required to take its fare share of the debt, were Scotland to vote to separate from the rest of the UK. The pro-independence campaign seized on the announcement as proof it was setting the agenda and would demand a currency union - allowing Scotland to continue using the pound - in return for accepting a share of the debt. British ministers have so far refused publicly to "pre-negotiate" terms of independence for Scotland. But Mr Salmond said the decision by the Treasury shows that UK ministers are coming to terms with "reality." He added: "These documents make clear that we remain prepared to negotiate taking responsibility for financing a fair share of the debts of the UK provided, of course, Scotland secures a fair share of the assets, including the monetary assets. 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. That position is now beyond argument and today's announcement makes clear that Scotland would be in an extremely strong negotiating position to secure that fair deal. Voters in Scotland will have their say on a referendum on independence on September 18, 2014 He said opponents of independence must end the "bluff and bluster" and "listen to the overwhelming majority of the people of England who, polls indicate, see the common sense of sharing a common currency." However, UK Chancellor George Osborne has ruled out allowing an independent Scotland to continue using the pound if voters choose to go it alone. The Scottish Government set out two possible positions on debt sharing in its formal White Paper on independence last November. It explored the historical balance of public spending and tax since 1980, when figures became available, or a population-based share. It calculates a historical share of debt interest could be £3.9 billion in 2016-17 or £5.5 billion based on a per head share.