A BUSINESS initiative co-founded by one of Yes Scotland's most vigorous supporters has called on the Scottish Government to prioritise financial services by cutting red tape and taxes, as well as funding the latest research into potential headwinds for the industry.

N-56, the brainchild of property developer Dan Macdonald, commissioned economists to draw up non-partisan recommendations for enhancing Scotland's position in the global financial league, as cities in smaller nations continue to outpace Edinburgh and Glasgow.

Capital Economics, which authored the 33-page blueprint, warned that onerous regulations could hinder the competitiveness of the financial sector, thought to be worth more than 8 per cent of the country's GDP.

It added that high corporation and personal tax rates could also put Scottish firms at a disadvantage.

The report urged the Scottish Government to adopt an extremely similar, if not identical, regulatory regime to that in the UK currently, in the event of a vote for independence, as well as sweep away taxes that "confer little benefit relative to their costs".

Furthermore, "suitably" skilled migrants from outside the EU must be able to secure visas easily so they can move to Scotland.

Mark Pragnell, head of commissioned projects at Capital Economics, said: "Whether independent or not, Scotland and the rest of the UK should ensure a stable regulatory framework, competitive tax regime and sensible immigration policies to retain talent in Scotland and attract individuals to work in the sector from elsewhere as well as more company divisional or corporate headquarters to locate there."

Scottish financial figures interviewed for the report also highlighted that their companies are much less able to exploit tax incentives for research and development purposes than companies in other sectors such as manufacturing.

As well as boosting those tax incentives, the government should also fund academic research to look at some of the biggest changes that could affect the industry in years to come, such as technology and an ageing population.

The report also included an estimation that the value of Scotland's asset management may now be worth more than £800 billion.