Cameron tries to woo Scots with bond issuing rights

Scotland will be given the power to issue its own bonds starting next year, British prime minister David Cameron’s government said as it steps up its campaign to keep the country in the UK.

The move, announced by chief secretary to the Treasury Danny Alexander, broadens the potential sources of funding for the Scottish government, though borrowing will continue to be limited to £2.2bn (€2.67bn). The British government will provide no guarantees on bonds issued by Scotland, the Treasury said.

“Being able to issue its own bonds gives Scotland new powers and new responsibility, within the security of the UK,” chancellor of the exchequer George Osborne said in a statement. “Alongside the considerable new tax and spending powers we have already given in the Scotland Act, it is further evidence of why being part of the UK gives Scotland the best of both worlds.”

The Scotland Act 2012 allows the Scottish government to raise £2.2bn for capital investment from the British government’s National Loan Fund and commercial loans, starting in April next year.

The debate around Scottish independence hardened last week when Osborne ruled out the prospect of the nation keeping the pound, if it chooses to separate from Britain. His position was backed by the Conservatives’ Liberal Democrat coalition partners and the opposition Labour Party.

As the September referendum draws near, attacks on independence have increased, with European Commission president Jose Manual Barroso saying on February 16 it would be “extremely difficult” for Scotland to join the EU.

The decision to let Scotland sell its own bonds follows a consultation carried out in 2012. It will allow the country to raise funds for major transport projects, hospitals, schools and flood defences.