Re: Banking Jobs
h4rm0ny,
Sharing out the national debt by population or possibly by share of GDP. I think that only varies around the 9-10% mark. This seems to be the 'standard' way of doing things, in so much as there is any standard for these situations.
Salmond has talked about reneging on this debt. But the rUK would almost certainly veto EU membership and retaliate in the split of the UK's assets. Plus that would cause massive ill-feeling and result in a severe damage to confidence in the new Scottish government. They'll be trying to borrow to finance their current deficit, get investment for new oil developments and keep as large a chunk of the financial services business as possible. Be hard as a Scottish exporter to the rUK as well, and that is a large chunk of Scotland's economy.
However, I think a deal will be cut where Scotland don't pay their 'fair share' of the debt, in exchange for the rUK taking more of the joint assets. Say we keep all the foreign embassies for a couple of hundred million, We've got about 15 submarines, but is it really worth having only 1? Or even 1 and a half... That's another billion or two. This soon adds up.
We could also do an exchange rate deal. Say Scotland's currency falls against the pound by 10%, then we let them off 10% of the debt, but if it rises by 10%, then they have to pay 10% more. This would be a nice hedge against what oil price fluctuations would do to their economy, and share the risk more fairly.
I guess another option might be that they pay a reduced amount of the debt, in exchange for paying it all off in one year. They'd then have to arrange large government debts in a single year, but it would give the markets certainty about the exchange rate risk. And we could pay down some debt and cover our deficit for a year. This might be good, because Scotland is likely to keep a large financial services sector, and being in Scotland and regulated by Scotland they will virtually have to buy large chunks of Scotish government debt. If they're staying in that country it's the safest and most convertible asset to own. So there should be a demand for more government debt than the few billion the Scottish government will be borrowing.
Those are the options I can think of. There could be more. It's down to negotiation.
Biting the hand that feeds IT
