ED Balls has hinted a future Labour UK government would a reject currency union with Scotland if there was a Yes vote in the independence referendum.

The shadow chancellor warned the arrangement would leave taxpayers outside Scotland liable for the costs of bailing out "foreign" banks.

He wrote in a newspaper article that Labour could not guarantee signing up to a 'sterlingzone' if the party won the 2015 election and became responsible for negotiating the terms of ­Scotland's exit from the UK. He said it would require fundamental decisions, including how a eurozone-style sterlingzone would work.

He said questions remained about whether taxpayers south of the Border would be willing to become a "lender of last resort for Scottish banks". "Whatever currency option Scotland ends up with after an independence vote, it will be less advantageous than what we have across the UK today," he wrote in The Scotsman.