TONY Blair has likened the SNP's drive for independence to UKIP's campaign to take Britain out of the EU.

Speaking in Edinburgh, the former Labour prime minister insisted Scotland's place in the UK goes with the grain of history and warned against "retreating into something smaller".

He added: "I feel about Britain separating out from Europe a bit the same way I feel about Scotland separating from the UK. The trouble with these people, whether UKIP or the Scottish Nationalist Party, is they have the idea that the cause of our problems are someone else and the cure is separating ourselves out from that."

Mr Blair's comments came during a Q&A session after he addressed the National Association of Pension Funds investment conference. He told delegates: "The fact is, in a world that is ever more interconnected, to disconnect yourself, either Scotland from the UK or Britain from Europe, is just not sensible because many of the challenges we face are the challenges you are going to have to face together, you are going to have to get solutions together. I think ultimately,

for Scotland, being part of the UK is in Scottish interests, it is in English interests, it is in the interests of the UK as a whole, because it goes with the grain of history. When you have got the single biggest commercial market on your doorstep, why on earth would you separate yourself off from that – however frustrating it is? You should be in there to try and win the battles, build the alliances and make the thing work because you can be sure the future is in being part of something bigger and not retreating into something smaller."

On Britain's membership of the EU he said: "I agree with a lot of what David Cameron says about reforming Europe, there is a strong case and Britain should be leading that case in Europe."

The PM has promised an in/out referendum on Europe in 2017 if the Conservatives win the next election in 2015.

The SNP claim the move has placed Scotland's position in the EU in doubt and only independence can guarantee it.

Nationalist MSP Christina McKelvie said: "The 10th anniversary of Tony Blair's invasion of Iraq on false pretences is a compelling illustration of the need for Scotland's Parliament to have the full powers of independence.

"Scotland needs a parliament with the ability to speak with our own voice in the world, get rid of nuclear weapons and build a fair society and strong economy. The more often Tory Blair argues for 'No', the stronger the 'Yes' vote will become."

Mr Blair's office said: "Mr Blair is not being paid specifically for this occasion, he is doing this as part of his international advisory role with JP Morgan for which he is paid." The US investment bank is reported to pay Mr Blair a retainer of £1m a year.