In a report published by the Economics Observatory he said: “Interest rates would at some point rise without a credible plan to reduce the budget deficit. And one reason why interest rates in the UK and other developed countries have remained so low is that central banks have, in effect, bought much of the newly issued debt.
“Because an independent Scotland would take some time to set up and establish its own central bank and currency, this option would not be immediately available.”
This would pose a particularly acute challenge to an independent Scotland as it already typically spends and borrows more per person than the UK as a whole, said the report.
Even as the UK Government’s finances are projected to recover to a deficit of 1.5pc of GDP by 2026-27, spending in Scotland will run ahead of tax receipts to the tune of 7.5pc of GDP according to Mr Phillips.
That is equivalent to £640 per person in the UK overall, compared to £2,975 per head in Scotland.
As a result English workers can expect to keep subsidising spending in the north indefinitely, as was the case before Covid struck.
This is driven by public spending in Scotland which averaged £1,550, or 12.3pc, more per person than the UK average in the five years before the pandemic, even as revenues were £325, or 2.8pc, lower.