A CROSS-BORDER war of words has broken out after the Scottish Government accused a senior Tyneside Conservative of leading efforts to “sabotage” the economy north of the border.

North Tyneside elected mayor Linda Arkley has been singled out for criticism by the Scottish finance secretary John Swinney in what he says is a political attempt to hold his country back from greater financial independence.

The row comes after chancellor George Osborne claimed the “instability and uncertainty that hangs over the Scottish economy” was as a result of the planned independence referendum, for which no date has yet been revealed.

In a letter Mr Swinney suggested the Chancellor’s remarks may have been “motivated by party political concerns” after he heard that Mrs Arkley had voiced fears that Scotland had an advantage in attracting jobs and investment.

The Journal revealed in September that book-seller Amazon had turned down the chance to bring 900 jobs to Tyneside after a Scottish quango stepped in to offer a £1.8m sweetener.

Mrs Arkley then started a sustained lobbying exercise as concern grew that several hundred more jobs were also being targeted.

Firms working in the offshore oil and gas sector have also warned that Scotland’s ability to offer businesses a lower tax rate than they would enjoy in the North East could undermine plans to rebuild the regional economy by attracting wind turbine manufacturers to the banks of the River Tyne.

A spokesman for Mr Swinney said the finance secretary’s bid to discuss economic problems with Mr Osborne had been snubbed as a result of political lobbying by Mrs Arkley.

The spokesman said: “The chancellor specifically refused to reply to his letter, leaving it instead to his Liberal Democrat deputy Danny Alexander.”

He said if the Treasury had “not been engaged in activities aimed at sabotaging investment in Scotland, then the only way that can be effectively resolved is for the Chancellor of the Exchequer himself to deny the charge”.