The global financial crisis may be heralding a thaw in relations between the Labour government in London and Alex Salmond's devolved Nationalist administration in Edinburgh.

It emerged last night that Jim Murphy, the newly-appointed Scottish Secretary in Gordon Brown's Cabinet, has invited the First Minister to a “summit” in Edinburgh, possibly as early as next week, to find ways in which the two governments can help Scottish businesses and families through the credit crunch and financial turmoil. Mr Salmond indicated last night that he would accept.

The apparent rapprochement between Labour and Nationalist rivals comes after 17 months of bickering and point-scoring between the Scotland Office and Scottish government over a host of issues ranging from the future of the Union to broadcasting and council tax benefit.

The initiative to end the verbal hostilities came from Mr Murphy in what can be viewed as a distinct change of tactics towards Mr Salmond by the Brown government in London.

The Scottish Secretary, who took over his new role only last weekend, wrote to the First Minister offering to promote issues that Mr Salmond believes should be on the agenda for the Prime Minister's new National Economic Council.

Mr Murphy went further by suggesting to the First Minister that they meet for “a summit” next week, along with the CBI Scotland and the STUC, to discuss specific Scottish issues arising from the turmoil gripping the world economy.

It is understood that Mr Murphy believes it is time for “a new tone” to the relationship. “The people of Scotland expect us to work together”, said a Scotland Office source. “We should do what the people expect us to do rather than arguing and finger-pointing.”

Mr Murphy, in his letter, also made a point of using the term ‘Scottish government” instead of “Scottish Executive” - the title for the devolved administration that has so far been favoured by his predecessors and other UK ministers.

Last night a spokesman for Mr Salmond responded by pointing out that Mr Salmond also had “a positive and constructive discussion” with Mr Murphy by telephone yesterday.

“He will reply to the Secretary of State shortly to arrange a meeting focused on these same objectives”, said the spokesman. He added: “In terms of what Scotland needs in order to maximise jobs, decision making functions, and build confidence and demand in the real economy, we would urge the Economic Council to give careful consideration to the views of the Parliament and government of Scotland.”

Mr Murphy's “hug them close” approach to Mr Salmond and his SNP ministers is a departure from that of his predecessors, who viewed the SNP government with deep suspicion. However, it also placed Mr Salmond in the position of having to accept the new cordial spirit of the Scotland Office for fear of appearing petty and partisan if he did not.

It also comes as Labour and the SNP lock horns in Glenrothes in the run-up to the by-election there on November 6. There is, however, no chance that the new spirit of mutual co-operation and understanding will spill over to campaigning in the streets of the Fife town.

Meanwhile, pressure was last night building among Scottish politicians for the proposed takeover of HBOS by Lloyds TSB to be called off, following the £50billion rescue of the banks by the Government. The proposal came from Tavish Scott, the Liberal Democrat leader at Holyrood, who said that part of the package should be made available to HBOS to allow it to remain an independent bank which, he said, would protect Scottish jobs and the bank's headquarters in Edinburgh as well as branches across the country.

Mr Scott said: “This is a massive package of money for banks. Market and banking circumstances have changed enormously since the proposed Lloyds-HBOS merger was announced.

“The Government are now in direct negotiations with banks so they could make this happen. Keeping HBOS as an independent bank while strengthening RBS through this package would be positive economic news for Scotland. I urge the Government to make this happen.”

He was given cautious support by Mr Salmond, who agreed that circumstances had now changed and that the banking bailout would give HBOS the liquidity it lacked at the time Lloyds TSB made its merger move.

Mr Salmond added: “An important aspect of the HBOS decision as regards Lloyds TSB was that it [HBOS] was not safe from a run on the bank. A measure of consideration should be given to that [Mr Scott's proposal] but at the moment the bid from Lloyds TSB is the only game in town.”

Mr Salmond welcomed the Bank of England's decision to cut interest rates by 0.5 per cent but he gave warning that further rate cuts were needed to boost demand in the real economy.

The First Minister also ruled out any UK-wide public spending cuts as a way of financing the rescue package as “ totally unacceptable.”

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