Page last updated at 14:29 GMT, Saturday, 14 March 2009

Cable: 'RBS would break Scotland'

Vince Cable
Vince Cable accused Labour of making "a pact with the devil"

The collapse of the Royal Bank of Scotland would have wiped out the budget of an independent Scotland, the deputy Liberal Democrat leader said.

Vince Cable said the RBS balance sheet was 15 times the size of Scotland's gross national product.

The Edinburgh-based bank, which lost 24bn last year, is 68% owned by the UK Government after a massive bail-out.

Mr Cable told the Scottish Lib Dem conference he was unsure whether the UK could cope with the banking burden.

On the prospect of RBS collapsing, he said: "What would an independent Scotland with this giant bank attached to it have done?

"Probably they would just have had to default - but that would be the equivalent of letting a hydrogen bomb explode in the middle of the financial system."

Crisis 'warning'

"They could not have done that, they would have had to have gone for help. This is what a proper debate on nationalism should mean in the present environment."

He said the capital that had to be put into RBS to keep it going would be roughly equivalent to the entire Scottish budget.

Mr Cable, who also speaks on Treasury issues, went on to welcome Tory leader David Cameron's apology for his party's failure to spot Britain's economic crisis at an earlier stage.

"It would have been rather bigger of him if he had also admitted that the Liberal Democrats did see this coming, and we did warn about it," he told delegates in Perth.

And Mr Cable accused Labour of making "a pact with the devil" when it came into power, "embracing" the banking community and the City of London and turning a blind eye to its failings.

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