UK guarantees independent Scotland's debt An independent Scottish state would become responsible for a fair and proportionate share of the UK's current liabilities, but a share of the outstanding stock of debt instruments that have been issued by the UK would not be transferred to Scotland. For example, there would be no change in counterparty for holders of UK gilts. Instead, an independent Scotland would need to raise funds in order to reimburse the continuing UK for this share. The promise comes amid fears from Treasury officials that market jitters about an independent Scotland's ability to service its share of the debt would drive up the Government's cost of borrowing in the coming months. "In the event of independence, the full spectrum of assets and liabilities - past, future and contingent - would need to be considered in negotiations between the continuing UK and Scottish Governments, on a case-by-case basis," the report states. This means that the negotiations would need to cover the arrangements for all forms of debt covered in this note, not just gilts and Treasury bills. The decision by the Treasury shows that UK ministers are coming to terms with "reality," according to Scotland's First Minister, Alex Salmond. He had previously suggested that Scotland would be entitled to refuse to take on debt if the UK continued to rule out discussion on sharing assets such as the pound sterling. This is a case of the Treasury being hoist on their own petard as they have effectively endorsed the common sense approach proposed by the Fiscal Commission a year ago and that we outlined in the Scotland's Future paper published last November. "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," Mr Salmond said. 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. The UK Government and Better Together campaign group should stop the "bluff and bluster," he added. On the issue of the currency, for example, they should listen to the overwhelming majority of the people of England who, polls indicate, see the common sense of sharing a common currency. The people know that it would be in the interests of both Scotland and the rest of the UK to do so, that it would be logical and desirable, as Alistair Darling said last year before he got caught up in campaign fever. The Better Together Campaign for keeping the union intact is struggling to get business leaders to state their opposition to Scottish independence due to fears of provoking an agressive response, it emerged on Friday. Insiders at the campaign say businesses remain sceptical of Mr Salmond's business and economic policy proposals, which set out in a recent White Paper.