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UK to make debt pledge ahead of Scotland referendum: source

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(Globalpost/GlobalPost)

(Reuters) - The British government will announce on Monday that it will take responsibility for all British government debt should Scotland vote to leave the United Kingdom this year, a person familiar with the situation said on Sunday.

"Essentially we would be the counterparty on any debt that was owed," the person said.

The UK government would seek a bilateral arrangement with the Scottish government about its share of the UK debt in the event of a vote for independence in September's referendum, the person said.

The person declined to be named ahead of publication of the notice by the Treasury on Monday.

Scotland will vote in September on whether to keep the 306-year union intact. Scottish nationalists say independence will free it from decades of economic mismanagement. The British government is campaigning to keep Scotland part of Britain.

Some investors had been seeking clarification from the Treasury about what would happen to UK debt if Scotland votes for independence, the person said.

The Scottish government has said it would pick up its share of the UK debt in negotiations after a yes vote and the Treasury's announcement would not weaken London's hand in any such talks, the person added.

An independent Scotland would "want to be seen as a responsible sovereign or markets will react accordingly," the person said.

The Financial Times, which first reported the story on Sunday, said Danny Alexander, Treasury chief secretary, feared investors could start demanding a risk premium if they feared some UK debt could be transferred to an independent Scotland.

Better Together, a group in favor of Scotland staying in Britain, said on its website last week that according to a poll by YouGov the group commissioned, 61 percent of voters are against quitting the UK while 30 percent back independence.

(Reporting by William Schomberg in London and Abhirup Roy in Bangalore; Editing by Phil Berlowitz)

http://www.globalpost.com/dispatch/news/thomson-reuters/140112/uk-make-debt-pledge-ahead-scotland-referendum-source