Scottish independence will trigger mass exodus of financial services

"The experience of the euro means that it is highly unlikely that there will be a banking union if Scotland is independent," Mr McWilliams told the Telegraph on Tuesday night. "Without that, most of the Scottish financial services economy will migrate to England where their customers are. This is potentially a huge boost to the City of London."

While the CEBR believes the tax rises and spending cuts needed for an independent Scottish government to maintain market credibility will be much lower than some suggest, the think-tank will warn that Scotland's huge financial sector relative to the size of its economy means secession will be costly.

Drawing parallels with Ireland, which voted to leave the UK in the 1920s, Mr McWilliams will say that an independent Scotland is likely to "learn about economics the hard way".

"Many Scots seem to think they are not voting for independence from the rest of the UK but for independence from the laws of economics which they seem to think have been imposed on them by the English. Unfortunately for those who think this, the laws of economics are not subject to referenda and will continue to exist beyond Scottish independence when it occurs," he will say.

While Mr McWilliams will tell an audience at the Gresham Professorial Lecture in London that Scottish independence looks "very likely" because patriotism will trump the "laws of economics", he will warn that Scotland faces an economic "slump" as it deals with "the knock on effect of the damage to some of its key sectors like financial services.

"Like Ireland in the 1960s there might well eventually be an economic revival when policy makers, having tried everything else, start to apply common sense.

"It took the Irish 40 years to achieve this post independence. By the time [Scottish citizens] see the light they might have lost as much as 10pc in growth and living standards from the slower growth compared with the situation had they stayed in the union."

According to Treasury figures, the financial and insurance sector adds around £9bn a year to Scotland's economy, and accounts for more than 8pc of Scottish activity excluding North Sea oil and gas extraction.

The sector also employs around 85,000 staff. Banks have already expressed concern about the prospect of an independent Scotland. In February, Lloyds Banking Group opted to domicile its TSB subsidiary in England rather than Scotland ahead of the new bank’s £1.5bn stock market float.

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