Scottish economy grows by 0.2% at the start of 2018

Construction took a hit in the first quarter, as severe weather hit Scotland

Official figures indicate the Scottish economy grew by 0.2% in the first quarter of 2018.

The figure is marginally above the equivalent UK GDP growth figure for the quarter, which was 0.1%

On a year-on-year basis, Scottish GDP grew by 0.8%. Finance Secretary Derek Mackay said the figure showed Scotland's economy remained "strong".

Secretary of State for Scotland David Mundell welcomed the growth in manufacturing.

Services and production continued to grow during the quarter, but construction declined sharply by 3.5%.

For services, the growth figure was 0.4%. Manufacturing grew by 0.9%.

Economic activity was suppressed by unusually severe winter weather.

'Top destination'

Mr Mackay said: "Scotland's economy is strong, with output per head the highest in the UK outside London and the south-east. We are also one of the top destinations for inward investment, while Scottish productivity has grown faster than the UK's over the past decade.

"Despite the impact of the 'Beast from the East' our economy continued to grow in the first quarter of 2018, making this the fifth consecutive quarter of growth."

But Mr Mackay claimed that leaving the EU could threaten the future performance of the economy.

"Our prospects for longer-term growth are threatened by Brexit and the prospect of being taken out of a market around eight times bigger than the UK's market alone," he said. "That is what poses the most serious risk to jobs, investment, prosperity and living standards."

Manufacturing is a strong part of the Scottish economy

For the UK government, Mr Mundell commented: "It is good to see that Scotland's economy is growing - especially in the manufacturing sector - however, over the year, Scotland's economy has lagged behind the UK's.

"The UK government is investing to boost economic growth through its ambitious modern industrial strategy, and direct investment into Scotland's cities and regions through growth and city deals.

"The Scottish government needs to work with us and use its extensive powers to make sure that it is supporting productivity and growth in Scotland."

'Domestic problems'

The body representing small businesses, FSB, said growing business confidence could help "get the economy moving".

FSB external affairs manager for Scotland Stuart Mackinnon said: "These figures show the Scottish economy growing slowly in the first three months of the year, though slightly faster than the UK as a whole.

"With new figures out today showing growing business confidence, it is up to policymakers to nurture this newfound optimism to get the economy moving.

"That means securing a Brexit deal that works for small firms and tackling domestic problems like late payment and poor digital infrastructure."

Economists at the Fraser of Allander Institute described the growth figure for the quarter as "disappointing".

Prof Graeme Roy said: "The continuing downturn in the construction sector - where activity is down 9.2% over the past year - is having a big impact on headline growth.

"Taking out the effect of the construction sector, the rest of the economy grew at a much healthier 0.5% over the first three months of 2018."

He added: "These figures are consistent with our view that growth will pick up this year, but remain below trend."