INDEPENDENCE could shrink Scotland's economy by up to £8 billion a year, or 5.5% of GDP, by creating a new trade border with England, the chairman of Better Together claimed yesterday.

Alistair Darling used a visit to the Border Union agricultural show in Kelso to warn thousands of Scottish businesses could suffer a so-called "border effect" if the integrated market within the UK ended.

Brian Ashcroft, professor of economics at the University of Strathclyde, last month estimated 250,000 Scottish jobs depend on trade with the rest of the UK.

Darling said: "The access to the single market of 63 million people in the UK rather than just five million in Scotland is good for Scottish jobs.

"Where is the sense in putting up barriers between Scottish firms and their customers in the rest of the UK? Breaking up the UK single market could cost the Scottish economy £8bn, risking thousands of jobs.

"We don't have to take that risk. We can keep the UK single market open for business and protect Scottish jobs by saying No Thanks to separation this September."

Darling's figures drew on a recent paper by economists from Stirling and Edinburgh universities that found "border frictions" between countries were costlier than within countries or between regions.

They estimated a border between Scotland and rUK could reduce Scottish GDP by around 5.5%.

But the paper said it was equally likely there would be a 3.5% increase in Scottish GDP if Scotland could overcome the border effect by improving trade with the rest of the world.

Marjorie McCreadie, owner of Teviotdale Arans, a knitwear firm employing 14 staff with half its customers in England, said: "My business relies on free and open access across the border. The Scottish Government's divisive attitudes will inevitably lead to a poorer business climate."

Paul Fletcher, a member of the pro-independence group Business for Scotland, said: "With both Cameron and Miliband talking about having a referendum on staying in or leaving the EU, there's a real danger that Scotland will be separated from a single market of some 500m people and that's a threat to business.

"Scotland needs independence to maintain our EU membership and our business advantages in it."