Manufacturing is in decline

Scotland's largest city also has a high rate of insolvency and a declining population, financial advisers Grant Thornton said.

The analysts studied growth indicators in Scottish cities and across the UK.

They found that Scottish firms were less likely to survive over a three-year period than other parts of Britain.

Failure rate

VAT registration figures showed companies in Glasgow having the lowest three-year survival rate in the UK.

Low start-up rates have meant the number of companies in Glasgow has been overtaken by those in Edinburgh in the last few years.

And insolvency figures for Scottish cities showed a higher than average failure rate for Glasgow.

Last year 4.5% of the city's 10,000 businesses became insolvent, compared to 1.3% in Edinburgh and 1% in Aberdeen.

The poor start-up rate, the low survival figures and the high insolvency figures indicate serious problems for the local economy which need to be addressed Matt Henderson Grant Thornton

A sharp decline in population was also threatening Glasgow's growth, the financial advisors said.

The figures also showed the total number of companies in Scotland has remained steady over the last decade.

The number of registered businesses rose slightly last year compared to the preceding year.

However, the number of companies has remained steady at around 119,000 - the same as the 1990 level.

Serious decline

Although also low, the UK growth rate over the last decade was three times higher than in Scotland.

Matt Henderson, a recovery and reorganisation with Grant Thornton, said: "We are seeing a distinct divide between different parts of Scotland with the West, and Glasgow in particular, apparently suffering from a long-term serious decline in its local economy.

"The poor start-up rate, the low survival figures and the high insolvency figures indicate serious problems for the local economy which need to be addressed."

The Forum of Private Business in Scotland said the analysis caused "the greatest concern" and again criticised Enterprise Minister Iain Gray for refusing to back recommendations to cut business rates.

In a statement, the group said the key to reviving the city's economy was in the manufacturing sector.

It said: "Glasgow's past and future relies on manufacturing and the good news is that the enterprise minister has accepted all but two of the recommendations of the Scottish Manufacturing Steering Group.