Scotland could become 'another Cyprus' if it becomes independent

Scotland risks becoming "another Cyprus" if it becomes independent, the Treasury claims.

Treasury officials will tomorrow publish analysis suggesting that Scotland's banking system is so large relative to its economy that an independent government would be unable to rescue the sector in the event of a crisis.

The pro-independence lobby will see this as the latest attempt by Whitehall to sway voters in the referendum on Scottish independence, scheduled for September 2014. The Scottish National Party has previously accused the British government of meddling in the referendum.

The report states: "The Scottish banking sector would be extremely large in the event of independence. It currently stands at around 1,254 per cent of Scotland's GDP. By way of comparison, before the crisis that hit Cyprus in March 2013, its banks had assets equivalent to around 800 per cent of its GDP – a major contributor to the cause and impact of the financial crisis."

John Swinney, the Scottish Finance Secretary, said: "This is a feeble attempt to undermine confidence in Scotland's ability to be a successful independent country – and it will not work."