SCOTLAND'S most respected economic think-tank yesterday accused Royal Bank of Scotland of overstating the value to the Scottish economy of the top 100 companies north of the border.

The latest quarterly economic study by Strathclyde University's Fraser of Allander Institute also had a mixed outlook for Scottish economic growth.

It revised Scottish gross domestic product up to 2.2% this year, but slashed its forecast from 2.7% to 2% in 2005 on fears that a combination of higher interest rates, lower house price inflation, and cuts in public expenditure would begin to crimp growth.

The quarterly study questioned Royal's principal finding in its May report that Scotland's top 100 companies created (pounds) 40.9bn of value to the economy, equivalent to 56% of Scottish GDP.

However, the think-tank estimated those same 100 companies made a direct contribution to the country's economy nearer to (pounds) 13bn, or just under 18% of Scottish GDP.

Additionally, the Royal report featured itself at the top of the rankings, one ahead of fierce rival HBOS, in relation to economic importance to Scotland.

However, the Fraser of Allander study ranks HBOS at the top of the chart, with Royal in second place.

Professor Brian Ashcroft, policy director at the Fraser of Allander Institute, told The Herald: ''It's obviously notable (Royal Bank) comes number one in its own calculation I'm not trying to rubbish (Royal Bank).''

He noted the Royal report was careful to stress that the (pounds) 40.9bn figure was ''equivalent'' to 56% of Scottish GDP and that ''not all of the wealth created by the top 100 companies is directly distributed into the Scottish economy''.

Nonetheless, he said there was ''sufficient ambiguity'' in Royal's report for the media to state that these companies, in effect, contributed 56% of the Scottish economy.

International companies, such as Royal, now make their money in a number of different countries, and not all of it filters back to the Scottish economy.

Royal's methodology was based on the ''value-added'' measure used by the department of trade and industry to create league tables based on what UK and European companies contribute to the economy.

Fraser of Allander derived its estimates of Scottish value added by applying the total employment in Scotland of each company to the Royal report's estimates of company value added.

Ashcroft said even after taking into account the companies' employee numbers in Scotland, the think-tank believes the (pounds) 13bn estimate of direct contribution to the Scottish economy was on the conservative side. He added: ''It is an inflated estimate still. We think it's actually less than that.''

He took some of the companies to task for their lack of transparency over their unwillingness to provide employee numbers in Scotland, saying this might be to disguise future job cuts. ''I find that quite depressing,'' he said.

As a result, Ashcroft was only able to establish Scottish employment in less than half of the companies. He added: ''One would have thought that their Scottish employment would

not be a commercially-sensitive piece of information, but many of these large Scottish companies refused to volunteer the information.''

One economic commentator said the contrasting statistics from Royal and the think-tank demonstrated how difficult it was to come up with a definitive methodology.

He also said there were pitfalls in placing too much emphasis on employee location, making a distinction between 3000 blue-collar workers in a factory, and 3000 highly-paid staff in a head office, which would also have a multiplier effect as it would use local services.

A Royal spokesman last night said: ''What the Fraser of Allander Institute are saying and what our report analyses are two different things.

''Our report focus had a wider perspective and an international context, an approach that was widely welcomed by the Scottish Executive and others.''

The quarterly study indicated the focus for concern in the Scottish economy may now need to shift from manufacturing to services, which has shown virtually no growth since the second quarter of last year.

The think-tank is forecasting growth in the service sector of 2.3% this year, falling to 2% in 2005 and 2006.

Manufacturing is expected to grow by 1.2% this year, 1.7% in 2005, and 1.3% in 2006.