Scotland saw zero growth in GDP for the first quarter in 2005

Figures, released by the Scottish Executive, also showed Scotland was still lagging behind the UK economy.

Gross Domestic Product (GDP) remained constant over the first quarter of 2005, while UK figures showed a 0.4% increase over the same period.

The Scottish National Party and the Scottish Conservatives seized on the figures to slam executive's policy.

In the first quarter of 2005, output in the Scottish service sector grew by 0.6%, and construction industry output was up 0.3%, while there was a 2.3% decrease in the production sector.

The production areas driving the quarterly decrease were manufacturing (-1.2%) and electricity, gas and water supply (-6.9%).

We should not read too much into one quarter's data Nicol Stephen Enterprise Minister

Enterprise Minister Nicol Stephen admitted disappointment in the lack economic growth in the first quarter.

However he pointed to continued annual growth of 2.0%.

"Despite the disappointing position for this quarter, the Scottish economy continued to expand over the year, with annual growth at its highest level for four years", he said.

"We should not read too much into one quarter's data, especially in light of the positive performance of the labour market during this period as well as the positive evidence which was being reported by the business surveys."

Wake up call

SNP enterprise spokesman Jim Mather said the GDP figures were the result of "a deeply flawed Executive strategy" and the devolved government's unwillingness to seek more powers from Westminster to act in Scotland's interests.

Mr Mather also demanded an independent office of national statistics, saying the system currently overstated wealth levels in Scotland.

He added: "The poor performance of the production sector is yet more evidence that we need to act in our own national self interest and put Scotland's manufacturing sector on a more competitive footing, especially as Scotland is particularly vulnerable to an increased competitive threat from eastern Europe and Asia."

This is yet more evidence that we need to act in our own national self interest Jim Mather MSP Scottish National Party

However the Scottish Conservatives branded the new enterprise minster's approach as "sluggish business as usual."

Conservative enterprise spokesman, Murdo Fraser said: "We have seen nearly 100,000 Scottish manufacturing jobs lost since 1997.

"At current rates, the sector will have virtually disappeared altogether in 10 years time if something is not done to reverse the decline."

He said that, to reverse the situation, the executive should cut business rates to at least the level in England.