This is a pretty good outcome for me as looking at the board my colleagues have made a very fast start to the year and there are plenty of new deals being signed up so I need to get moving as well.
I have been trying to push an optimistic view for 2014 in my recent blogs and I hope that this first week’s experience is going to set a tone for the rest of the year.
On a more general level I have been reviewing the financial press to see if there are any stories that piqued my interest and the one that stands out is the UK Treasury assuring investors that they will stand behind all of the UK debt even if Scotland were to move to independence.
This is an interesting little dilemma for the authorities as they do not want to scare investors and push up borrowing rates on Gilts, but it does seem to put the Scottish nationalists into a position of some leverage.
If, and I think it is still a big if, Scotland were to become independent the UK would want them to take a proportion of the national debt with them (though how this would be calculated would surely be a major issue as well). This is all fine and dandy, but as an investor you would be pricing UK debt at a lower level to Scottish debt and hence the fear that this will start to be priced into current Gilt prices. The UK Treasury has pre-empted this with the announcement that they will stand behind all UK debt including any that may be apportioned to an independent Scotland.
Maybe I am being too cynical here, but if I were in the shoes of a Scottish Nationalist I would be thinking the best course of action would be to disassociate from any current UK debt and start with a blank page for new Scottish Government debt programme (suggestions on a postcard for what these would be called… Jocks maybe?). I am sure that given the aforementioned comment re arguments that would arise from how debt levels would be split the Scottish Nationalists would produce figures and stats (probably around North Sea oil and gas) to show that they don’t owe the UK anything.
What would the UK Government do then? They have already assured investors that they are going to stand behind all UK debt, so if an independent Scotland decide to wash their hands of the debt there would probably be very little that the UK could do.
It isn’t quite Braveheart, but I am sure it would appeal to a certain element of the Scots to stick it to those south of the border.
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