The Labour Party has blamed SNP cuts to housing budgets for the double-dip recession.

Debate centres on the best way to revive the ailing Scottish construction industry, which shrank by 14.1% in the last quarter compared with the same time period in 2011.

Differing opinions on the best way forward came into focus after Scotland’s chief economist warned prosperity levels would not return to pre-crash levels for another two years.

Gary Gillespie's State of the Economy report said higher levels of saving and a lower ratio between house prices and income could see Scotland bounce back quicker than the rest of the UK.

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But the report prompted finance secretary John Swinney to again call for Chancellor of the Exchequer George Osborne to pump billions of pounds into construction north of the border.

He said: "We need the Chancellor to take action and borrow an extra £5bn to invest in capital projects which would guarantee Scotland’s £400m-plus share would be allocated in this financial year. We need the UK government to adopt a Plan B and perform another budget U-turn."

Labour finance spokesman Ken Macintosh countered this by saying there was "no excuse for the SNP's failure to address the real issues in Scotland's economy."

He said: "The real problems affecting the construction industry are

at the heart of these latest figures, and the SNP's £100m cut to housing cannot have helped.

"Housing usually makes up around 40 per cent of the Scottish construction industry, but we've seen 12,000 job losses in that sector in the last year alone.

"This was a blunder by the SNP."

(NE)