Economic growth in Scotland expected to 'lag behind UK', says Fraser of Allander

Money - stock

Scotland's economy is "stuck in a cycle of weak growth", according to economic think tank the Fraser of Allander Institute.

Official figures due next month may indicate Scotland has tipped into recession, the group said.

Despite positive indicators from business activity and the job market, think tank expressed "increasing concern" about the a slowdown across industry.

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"Scotland's economy seems to be stuck in a cycle of weak growth, declining confidence and poor investment and net export figures," the report said.

The performance gap between Scotland's economy and the UK economy as a whole is likely to widen, Fraser of Allander director Graeme Roy said, but he predicted some sectors such as food and drink would continue to grow..

"On balance, our forecast is that growth will return in 2017, with tentative signs of a more positive outlook for Scotland's oil and gas sector and improving order books across Scottish businesses.

"In the current climate sentiment can change quickly. Should the upcoming Brexit negotiations go badly, or the UK economy slows down more quickly than anticipated, then Scotland's economic prospects could take a sharp turn for the worse."

Scotland's Economy Secretary Keith Brown ​said the unemployment rate was much lower than the Fraser of Allander Institute had previously predicted.

"While challenges remain, the report also confirms emerging signs of confidence returning to the oil and gas sector, building on recent reports from Bank of Scotland and Aberdeen and Grampian Chamber of Commerce," he said.

"While these signs are encouraging, we must be clear that the biggest threat to Scotland's economy continues to be Brexit - as this report makes clear."

Scottish Conservative economy spokesman Dean Lockhart said: '"As this report states, whether or not Scotland officially enters recession hangs in the balance. And that's while the rest of the UK powers ahead, so the SNP can't possibly blame Brexit.

"This is on the Scottish Government's shoulders, and it has to explain what it is going to do to kick-start the economy it is in charge of."