THE Scottish Government is “holding Scotland back” with its flagship policies, Alister Jack insisted today, as the latest jobs figures showed a surge in unemployment and a substantial fall-back in employment.

While the rate of employment across the UK in the three months to July hit a record high with workers' wages continuing to rise, the picture north of the border was bleaker.

Over the period, Scotland’s overall labour market weakened with employment falling by 33,000 and unemployment increasing by 19,000.

“It is disappointing to see a sharp increase in unemployment after a period of encouraging figures,” declared the Scottish Secretary.

“It shows we cannot be complacent. One of our key priorities is to work with the Scottish Government to boost the Scottish economy and create jobs. The UK Government is investing £1.4 billion in city and growth deals and we are preparing to take advantage of the opportunities that will arise when we leave the EU on October 31.”

Mr Jack added: “But I would urge the Scottish Government to use their powers to best effect. Making Scotland the highest taxed part of the UK and creating uncertainty by threatening a second independence referendum are holding Scotland back.”

The figures from the Office for National Statistics show that Scotland’s unemployment rate is at 4.0 per cent; back to the rate of 12 month ago and up on the recent record low at the start of the year.

Scotland’s unemployment rate is now above the UK’s as a whole at 3.8 per cent, which remained unchanged over the last quarter.

The number of people employed in Scotland, 2,669,000, is down on the recent record high of 2,702,000. This means that Scotland’s employment rate, at 74.9 per cent, remains below the UK’s rate at 76.1 per cent.

Across the UK, the number of people in work rose by 31,000 to 32.78m from April through to June but the growth in employment fell below analysts’ expectations, which had forecast a 55,000 rise.

The rate of UK unemployment is at its lowest in 45 years, driven by a record low in the percentage of women who are unemployed.

The number of people out of work dropped 11,000 to 1.29m for the quarter, as the rate of unemployment stayed flat at 3.8 per cent, lower than predicted by analysts.

However, job vacancies continued to tumble, falling 23,000 to 812,000 during the period, stoking fears of an economic slowdown.

The ONS pointed out that vacancies were at the lowest level since November 2017, driven by declining job openings at small firms.

UKwide employment also increased with the percentage of women aged between 16 and 64 in work, remaining at a record high of 72.1 per cent.

Average earnings, which include bonuses, had the fastest rate of growth since May 2008 as they increased by 4.0 per cent compared with 3.8 per cent in the previous month.

The ONS said in real terms - after adjusting for inflation - total pay is estimated to have increased by 2.1 per cent compared with a year earlier.

David Freeman, head of labour market statistics for the ONS, said: "The employment rate has remained fairly constant at a joint record high for some months now, while the unemployment rate was last lower at the end of 1974.

"Vacancies continue to fall back from recent record highs, with much of this decline coming from small businesses. Including bonuses, wages are now growing at 4.0 per cent a year in cash terms for the first time since 2008.

"Once adjusted for inflation, they have now gone above 2.0 per cent for the first time in nearly four years," he added.

Commenting on this month’s labour market statistics update, business minister Jamie Hepburn said:“The increasing likeliness of a ‘no deal’ Brexit remains the biggest threat to jobs, businesses and our economy and the Scottish Government will work as hard as we can to mitigate its impact.

“Our Future Skills Action Plan is one of the actions we are taking to help ensure Scotland has a skilled and productive workforce which is resilient to future economic challenges.”