Scottish Finance Jobs Face Inflation Risk

Wage inflation is eroding the competitiveness of Scotland's financial services industry and threatens to force thousands of jobs overseas, according to a new report.

Scots in routine banking and finance jobs have enjoyed bigger pay rises than their rivals elsewhere despite producing little more value, making them vulnerable, according to the Ernst & Young Scottish Item Club summer report. Dougie Adams, the Item Club's economic adviser, said: "If this continues there is a danger it will take the gloss off the growth of the sector, reduce Scotland's attractions for projects and activities that have a choice of location, and will increase the penetration of imports of these services from the rest of the UK."

The warning follows the deal between Resolution Life, the fund management business, and Capita, the business outsourcing group, which is expected to result in 500 jobs being moved from Resolution's Glasgow base to India.

Scotland's economy has benefited from rapid growth in financial services over the past 10 years and the industry now employs 300,000 people - 66,000 more than manufacturing.