UK says Scotland independence would put jobs and growth at risk
* Government report say independence compromises business
* Scotland critical, says split based on tight union
LONDON, July 2 (Reuters) - Growth and jobs could be at risk if Scotland hinders access to its biggest export market by voting to split from the rest of Britain in a referendum next year, British business secretary Vince Cable said on Tuesday.
Businesses operating in an independent Scotland would face reduced access to the British market, extra regulatory and administrative costs and increased uncertainty, analysis by the government due to be released on Tuesday will show.
Scotland's 5 million population will vote next September on whether they want to keep a 306-year union intact. Scottish nationalists say independence will free it from decades of economic mismanagement, while the London-based government is campaigning to keep Scotland part of Britain.
"The union works for businesses on both sides of the border," Cable said. "Breaking up Scotland's most lucrative market would destabilise enterprise and potentially put growth and jobs at risk."
Scottish exports to the rest of Britain were worth 45.5 billion in 2011, excluding oil and gas. That is double the value of exports to the rest of the world and four times that of those to the European Union, the report said.
Joining the European Union post-independence would not compensate many businesses for the loss of unfettered access to the British market, the analysis said, highlighting the possible loss of access to infrastructure and services such as Royal Mail, which delivers to most of Britain for a flat fee.
The Scottish government criticised the report, saying Scotland was proposing to keep a single market for goods and services with the rest of Britain, including a currency union.
"Independence would allow future Scottish Governments to require proper connectivity for rural areas, boost business growth and ensure a combined economic regulator that is both cheaper and more efficient than Westminster's bureaucracy," a spokesman for Scotland's devolved government said.
The report also acknowledges that independence could damage the prospects for the rest of Britain, costing British exporters their second largest market.
The Confederation of British Industry (CBI) said free movement of goods, services, capital and people benefited both sides of the Scottish border.
"Scottish independence risks hampering this - businesses could have to deal with different regulations and currencies, for example, which would inevitably have a negative economic impact," said CBI Director-General John Cridland.
Recent polls show nearly 60 percent would vote against independence.
The British government has recently produced research showing Scotland would have a unsuitably large financial sector post-independence including much of the operations of Royal Bank of Scotland and parts of Lloyds Banking Group
It has also said that the Scottish government's proposal for a currency union would not work.
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