A VOTE for Scottish independence in 2014 would result in a second referendum in England, Wales and Northern Ireland if Westminster were to agree to Holyrood's demand for a currency union, it is claimed.

The warning came from a senior Coalition source who said that a referendum would "obviously" be needed if the UK Government wanted to take the 'huge step' of taking Britain into the euro.

Stressing it is a personal view, the insider added that if Scotland backed independence and a currency union was eventually agreed with the rest of the former UK "there would have to be a referendum south of the border to see if voters in England, Wales and Northern Ireland wanted to join."

George Osborne has not ruled out the possibility of acceding to Alex Salmond's desire that an independent Scotland would keep the pound and join the rest of the UK in a currency union but he and other Coalition ministers have stressed how it would be "unlikely" because it would pose risks to those in England, Wales and Northern Ireland.

In April, when launching a Treasury analysis paper on independence, the Chancellor pointed out how in a currency union the rest of the UK's 58m people would have to give up some of their sovereignty to a nation of just 5m and expose themselves to new economic risks in any formal deal between the two countries. "Why would the citizens of the rest of the UK think it's worth the risk? It is unlikely the rest of the UK would agree to this arrangement of that this arrangement could be made to work," he said.

A No 10 insider pointed out that the idea of a second referendum was a "hypothetical piled on top of another hypothetical" and what the UK Government was concentrating on was winning the "only poll in town", that is, the one taking place in September 2014.

Meantime, a Whitehall source admitted that the UK Government expected the consistent poll lead of around 10 points enjoyed by the No camp to fall. "There will be peaks and troughs, we know that," he said.