AN INDEPENDENT Scotland would have the second highest fiscal deficit of any advanced economy, creating an extra £1,000 per head above current UK levels, according to Treasury analysis.

The consequence would be higher taxes and spending cuts to balance the Edinburgh books, insisted Danny Alexander, the Chief Secretary to the Treasury.

The warning came as the leading credit rating agency Fitch said, based on the latest polling numbers, it expected a No vote in September but claimed the UK would need longer to recover its triple-A debt rating if Scotland gained independence and said, while it assumed an independent Scotland would gradually repay its share of debt to London, this would "leave the UK exposed to Scottish credit risk, at least in the early years of independence".

A Coalition insider made clear this bolstered the reasoning behind all the main Westminster parties ruling out a currency union with an independent Scotland.

But a Scottish Government spokeswoman hit back, stressing how figures showed an independent Scotland would be the 14th wealthiest country in the OECD compared to the UK at 18th and that between 2008 and 2013 Scotland was in a stronger fiscal position compared to the UK to the tune of £8.3bn or £1600 per capita.

"Independence will give Scotland the economic tools we need to grow the economy more quickly and improve the fiscal position.

"Our proposals for a formal currency union, which fully take account of the integrated cross-border banking sector, and which include rules for joint fiscal prudence, makes sense for the rest of the UK."

The Treasury analysis is based on new global fiscal forecasts released this week by the IMF as well as the most up-to-date independent estimate on an independent Scotland's fiscal position from the Centre for Public Policy Research.

These, it said, showed a tax and spend deficit of 5.5% in 2016/17, equivalent to £9.5bn, or £1760 per head; this would be around £1000 greater than the UK's deficit per head in the same year.

The Treasury emphasised how the latest independent forecasts were in "stark contrast" to the Scottish Government's contained in its White Paper, which "understate the likely size of the deficit in the first year of independence by over two percentage points of GDP".