Scottish economic growth 'longest since 2001'

Scotland's economy has seen its longest period of uninterrupted growth since 2001, according to the Scottish government's chief economist.

Gary Gillespie said the 11 consecutive quarters of expansion and upbeat forecasts for the future demonstrated the economy's underlying resilience.

But the growth was partly driven by one-off public sector building projects, he said.

And he warned the economy may not be keeping pace with consumer spending.

In his latest State of the Economy report, Mr Gillespie also said there were signs of an impending rise in UK interest rates early next year.

He said all main sectors of the economy grew, with a particularly strong performance in construction, but this was driven wholly by public sector building.

Nearing completion

He added that the growth in public building was unlikely to continue indefinitely as major public projects such as the Forth Replacement Crossing, two hospitals in Glasgow, Borders Railway and new schools were either finished or nearing completion.

Meanwhile, private building had contracted with a decline in industrial and commercial building, such as new shops and warehouses, only partly offset by a growth in house building.

Mr Gillespie said: "Growth in household income has not kept pace with consumption, resulting in the savings ratio in Scotland falling, therefore a pick-up in productivity and real wages is needed to support consumption patterns.

"With employment now hovering around record levels we expect the pace of employment growth to ease somewhat and we should see a pick-up in productivity growth and rising real wages.

"Both of these are required to sustain competitiveness and consumption patterns."

Oil prices

Mr Gillespie also said low oil prices would have both "positive and negative implications" for the Scottish economy.

On the one hand, the price had kept business and consumer costs and prices low, thereby subduing inflation but it had had a knock-on effect for Scotland's oil industry.

Forecasts point to a positive outlook for Scotland's economy for the rest of this year with growth of about 2.4% in 2015 predicted.

Deputy First Minister John Swinney said: "Our programme of investment in public infrastructure is paying off, helping support a particularly strong performance in the construction sector.

"The benefits from this investment will underpin future growth in the Scottish economy and is the appropriate response in order to support and grow the economy rather than the UK government programme of austerity."