Blair warns Scots on nationalists

LONDON (Reuters) - Prime Minister Tony Blair warned Scottish voters on Friday of the economic risks of backing nationalists at May elections in which the Labour Party risks losing control of the Edinburgh parliament.

Scotland has been a traditional Labour support base but public anger over Blair's backing for the Iraq war and disillusionment with his government after 10 years in power have fuelled support for the Scottish National Party (SNP).

The prime minister clashed with one of Scotland's best known businessmen on Friday after he publicly backed the SNP and rubbished Blair's arguments over the dire consequences of Scottish independence for industry, investment and jobs.

"There is a risk to the economy, there is a risk to the family, from separation itself and from the policies of the SNP," Blair said on a visit to Edinburgh, where he launched a Labour document attacking the nationalists over economic policy.

Opinion polls have given the nationalists in the Scottish parliament a lead over Labour ahead of the May 3 vote and ministers are on the attack.

Analysts, however, say it is highly unlikely the SNP will win a majority and that independence is a distant prospect.

To govern, the SNP would need to form a coalition with another major party and they all support the 300-year old union between Scotland, England and Wales.

In a boost to the SNP campaign, George Mathewson, chairman of the Royal Bank of Scotland until his retirement last year, indirectly accused Blair of scaremongering.

"I do not share the fear of independence which is currently being fostered by those who have most to lose by a change in the status quo and those who see Scotland as a source of safe seats, thus guaranteeing their rule over the United Kingdom," Mathewson wrote in The Scotsman newspaper.

Mathewson is a known sympathiser of the SNP but his public statement of support for the party attracted widespread media coverage, coinciding with Blair's visit to Edinburgh, and drew a stern response from the premier.

"I have to say, with great respect to Sir George, that I regard it as pure self-indulgence," Blair said.

"It's absurd to say that there is not going to be a cost and a penalty -- particularly when the SNP have got unfunded commitments, proposals for a local income tax, and when our two economies are so closely integrated," he said.