Calls for Scotland's parliament to be recalled from its summer recess to discuss the economy have been rejected by Presiding Officer Sir David Steel.

Opposition MSPs demanded that politicians have their summer holiday interrupted to discuss the recession in Scotland's economy.

Sir David said statistics showing the economy shrank for two consecutive financial quarters were serious, but not an emergency which demanded urgent attention.

The Scottish National Party had demanded the recall, saying that the Holyrood body must take the lead in tackling the downturn.

The figures show Scotland holds its own in getting its share of inward investment in the UK

Iain Gray Enterprise Minister

Economy spokesman Andrew Wilson said that the Scottish Executive had spent the last three years in "denial".

However, Enterprise Minister Iain Gray defended the executive's role and stressed Scotland was "holding its own" on inward investment.

The war of words began on Wednesday after official figures showed the gross domestic product (GDP) fell by 0.7% in the first quarter of this year.

Inward investment

That followed a drop of 0.3% in the last quarter of 2001.

It was the first time since the early 1980s that the country had seen two successive falls in GDP - the definition used by many economists for a recession.

Speaking on BBC Radio Scotland, Mr Gray admitted that the country was facing a growth problem.

Manufacturing has been hit

"There is a definition of technical recession around the results of two quarters and it is very clear that we have two quarters here reporting negative growth," he said.

"The only health warning I would put against that the second quarter figures are provisional and will be revised in due course."

The figures also showed a fall in the value of Scotland's inward investment projects from �1.7bn to �271m over the same period.

"The difference between the situation we are in now and the situation in the 1980s is that we have employment at historic highs and a different approach," said Mr Gray.

'Shrinking market'

"The approach back then was to attract inward investment - now we have an approach of building our own business and targeting our strengths.

"The inward investment market across Europe last year dropped by 40% and by 50% globally.

"The figures show Scotland holds its own in getting its share of inward investment in the UK and that is in a shrinking market."

The parliament must be recalled at the earliest opportunity to show a lead and bring the government to account for years of complacency

Andrew Wilson SNP economy spokesman

However, the SNP argued that the country needed full independent and economic control to tackle the problem.

Mr Wilson said: "The complacent Labour government have admitted that Scotland is in recession for the first time in 20 years.

"This is grave news confirming the fears of many that Scotland's mediocre economic performance is tumbling into a crisis.

"Having spent months and years in denial, the Labour party must now accept there are core and long-term problems in Scotland's economy of which this recession is the latest and most serious symptom."

'Years of complacency'

He said that the situation needed urgent attention.

"The parliament must be recalled at the earliest opportunity to show a lead and bring the government to account for years of complacency," he argued.

"We need action now more than ever and the economic powers to deal with the problem."

SNP business manager Fiona Hyslop wrote to Sir David asking for the recall.