THE economic challenges facing an independent Scotland would be "significant but not unsurpassable", the leading credit rating agency Standard and Poor's has concluded.

In a report, it explained how it expected a breakaway Scotland to "benefit from all the attributes of an investment-grade sovereign credit characterised by its wealthy economy, high-quality human capital, flexible product and labour markets and transparent institutions".

But it also noted how a newly-independent Scotland would "begin life with comparatively high levels of public debt, sensitivity to oil prices, and, potentially limited monetary flexibility".

S&P explained that agreeing a currency union with the rest of the UK would provide "considerable support" for an independent Scotland's credit rating; an option ruled out by all three main Westminster parties but which the SNP believes they would agree to if there were a Yes vote.

Last night, Blair McDougall of the Better Together campaign picked up on the agency's warning that using the pound without a currency union, would hit an independent Scotland's credit rating.

But Nicola Sturgeon, the Deputy First Minister, described S&P's report as a "glowing assessment", saying it "concluded Scotland's wealth levels are comparable to those of AAA-listed nations."