SOARING oil prices would give an independent Scotland a £4.4 billion budget surplus, making it one of Europe's richest countries, according to a new study.

The surplus would allow Alex Salmond to maintain existing levels of public spending, while cutting corporation tax from 28% to 12.5%, reducing income tax by 5p in the pound and still having £2 billion every year to invest in a Norwegian-style oil fund to safeguard Scotland against a future decline in North Sea oil revenue.

The study, based on Treasury oil revenue forecasts and official spending figures, has calculated that, without money from the taxation of oil and gas, an independent Scotland would have an underlying deficit of £7.8billion. But when £12.2billion of oil and gas revenues are included, Scotland would have a surplus of more than £4billion.

The findings are likely to be seized on by Salmond to claim in a referendum campaign that an independent Scotland would be one of the wealthiest nations in Europe.

This would create problems for Wendy Alexander, the Scottish Labour leader, who has indicated that she supports a vote on separation.

Last week the Scottish government wrote to Alistair Darling, the chancellor, demanding talks on transferring North Sea revenues to Holyrood.

The calculations, by leading accountancy firm Grant Thornton, are in stark contrast to a UK government report in 2006 that indicated that an independent Scotland would have a deficit of £6billion, even if oil and gas revenues were taken into account. However, the price of oil has more than doubled since 2005 to $120 (£61) a barrel, leading economists to conclude that Scotland “is sitting on a gold mine”.

Maurice Fitzpatrick, an accountant with Grant Thornton, who has examined the economics of an independent Scotland for the past decade, said: “There is no doubt about it. The figures point to a very rosy picture.”

He added that the report, commissioned by The Sunday Times, may have underestimated the Scottish surplus because the calculations assume that Scotland would receive 82.5% of North Sea oil revenues. Salmond, however, is demanding a 95% share, which would raise Scotland's budget surplus to an estimated £6.2 billion.

While the amount of oil and gas being extracted from the North Sea fell by 5% last year to 2.8m barrels a day, the price rise has more than offset the decline.

Many oil analysts believe the cost of oil will rise soon to $150 a barrel and could reach $200 by 2010, because of demand from China and India and concerns about the security of supply.

Other economists are more sceptical. Thorsten Fischer, senior economist at the Royal Bank of Scotland, expects the price to fall by 30% over time, which would lead to a more modest surplus.

Oil & Gas UK, the offshore industry body, expects the volume of North Sea oil and gas extracted to fall to 2.4m barrels a day by 2010 but claims reserves could be drawn for a further 30 years.

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