ALEX Salmond insists an independent Scotland would retain full tax and spending powers.

This comes despite the Governor of the Bank of England's warning it would have to cede some financial sovereignty in a currency union with the UK.

The First Minister, in his most detailed response to Mark Carney's intervention earlier this week, made it clear the SNP Government following independence would be happy to hand control over monetary policy to the Bank but stressed that "doesn't cover the rates of taxation; I don't think there's any need for that".

Mr Salmond again repeated his threat that if the UK refused to join a currency union - Chancellor George Osborne has said it is "highly unlikely" - an independent Scotland would be entitled not to accept responsibility for a share of UK debt, the "legal liability of Her Majesty's Treasury".

But last night Ed Balls, in his first response to the Governor's remarks, insisted the First Minister could "not run away from the difficult questions".

In a speech in East Ayrshire, the Shadow Chancellor said: "The Governor's important speech is a wake-up call to those who want to avoid discussing what the economic consequences of breaking-up the UK would be for Scotland.

"He was clear the eurozone showed currency union without fiscal union won't work. But the SNP immediately rejected fiscal union. Salmond's rejection of the key test set by the Governor makes an already flawed proposal even more unworkable," said Mr Balls.

He said Mr Salmond could not claim Scotland could keep the pound. "He simply cannot make that promise because it would take both sides to agree. The only way to guarantee the pound is to stay in the UK."

Elsewhere in his speech, the Shadow Chancellor made it clear Labour was committed to delivering a surplus on the current budget and to reducing national debt. " But we will make different choices to get the deficit down in a fairer way," he said.