'Optimistic' outlook for Scotland's economy

Researchers cited a strengthening oil and gas sector and robust global economy as key factors in their assessment

Scotland's economy could recover this year, but businesses are still hampered by uncertainty, experts have said.

The Fraser of Allander Institute is forecasting a 1.2% increase in Scottish GDP in 2018 and 1.3% growth in 2019.

The figures are more optimistic than the government's official forecaster, the Scottish Fiscal Commission.

Researchers cited a strengthening oil and gas sector and robust global economy, but warned Brexit remained the greatest risk to economic recovery.

A "pick-up" in household and business confidence was also a key factor in the report's optimistic assessment, researchers said.

'Challenging time'

However, the University of Strathclyde institute warned that disruption to the economy from severe winter weather in March would likely contribute to weaker growth in the first three months of 2018.

John Macintosh, tax partner at Deloitte, said: "There are some encouraging signs that Scotland's economy is improving and will perform better this year than last year.

"Some of Scotland's exports, particularly food and drink, are showing strong growth and sentiment in the oil and gas sector, which is emerging from a hugely challenging time, has returned to its highest level since spring 2013."

But Mr Macintosh said business should prepare themselves for the opportunities and challenges ahead.

'Brexit uncertainty'

Prof Graeme Roy, director of the institute, said: "With just nine months to go until the UK leaves the EU, the lack of a coherent plan from within Whitehall about the UK's long-term economic relationship with our most important trading partner risks holding back Scotland's recovery.

"Irrespective of whether you agree or disagree with the decision to leave the EU, the uncertainty caused by this lack of clarity is making it extremely difficult for businesses to develop contingencies or plan for the future.

"Two years on from the referendum outcome, simply kicking the can down the road is simply no longer a credible economic strategy for government to adopt."

Economy Secretary Keith Brown said: "These latest statistics demonstrate that there is much to be positive about Scotland's economic performance in 2018 on both the domestic and global stage.

"As this analysis shows, the prospects for longer-term growth are threatened by Brexit uncertainty and the prospect of being taken out the European single market and customs union. This poses a serious risk to jobs, investment, prosperity and living standards."