Ernst & Young’s Scottish ITEM Club has warned that while growth in financial services is creating a vibrant Scottish economy there are ‘potential clouds on the horizon for 2008’.

The economic group in its summer update said Scotland would enjoy a growth of 2.5% in 2007 but growth is likely to fall back to 2.3% in 2008, with interest rates and the slowdown in public spending growth constraining both the UK and Scottish economies.

Dougie Adams, economic advisor to the Ernst & Young Scottish ITEM Club, said: ‘Though Scottish consumers are less exposed to the effects in rising interest rates and Scottish producers less dependant on export markets than the UK average, Scotland cannot expect to escape the softer UK conditions we forecast for 2008. However in context of recent years this still represents a relatively strong performance for Scotland.’

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