One of Scotland's leading private equity specialists has warned the UK Government history tells us "we cannot cost-cut our way to recovery" and called on ministers to implement a strategy to boost economic growth and stimulate investment.

Speaking the day after the Bank of England predicted the UK economy would stand still this year, Calum Paterson added his voice to calls for the Coalition Government to try to kickstart a recovery.

Critics of the Government claim its deficit reduction policies are stifling the economy.

Mr Paterson, managing partner of Scottish Equity Partners, said: "These are extremely difficult times for the vast majority of businesses, given the very evident lack of momentum in the economy."

He said the Government "needs to implement a growth strategy and stimulate investment and spending in the economy. History tells us we cannot cost-cut our way to recovery".

As the head of a business that invests in firms in high- growth areas such as IT, healthcare and energy in the UK, Mr Paterson's comments will be studied with interest.

However, Mr Paterson said Scottish Equity Partners had had "another very solid year" in the 12 months to June.

He said portfolio companies were "testa-ment to the efforts of the entrepreneurs we have backed".

Scottish portfolio companies include Skyscanner, which Scottish Equity Partners describes as the world's fast-growing flight search company, and Daysoft, the online contact lens company.