The Scottish economy will lag far behind the rest of the UK’s as Scottish financial-services firms may slash 3,000 jobs in 2010.

A fresh report by the Ernst & Young LLP’s Scottish Item Club has predicted that the Scottish economy would shrink by 4.9 per cent this year and would develop by 0.7 per cent next year.

The study forecast a slow and patchy recovery because of disturbing weakness in country’s financial sector.

The report also said that job losses would continue, prompting unemployment soar further.

Scotland suffered a loss of as many as 4,300 finance jobs in the 15-month period through June and restructuring plans may bring further job losses.

Speaking on the issue, Dougie Adams, senior economic adviser at the Ernst & Young Scottish ITEM Club said, “Recent announcements by the banks suggest that the process of rationalization is yet to get into full swing.”

As many as 14,000 government-related jobs may also be hacked in 5-year period to 2014 as a part of spending cuts to tackle the problem of budget deficit.