GROWTH in Scotland has begun to “diverge quite markedly” from that in the UK as a whole, in spite of a boost from public investment in infrastructure, a leading think-tank has declared.

Strathclyde University’s highly-regarded Fraser of Allander Institute notes that Scotland is increasingly underperforming in terms of growth even though expansion in the UK as a whole is slowing.

It cites a drag on Scottish growth arising from “lower for longer” oil prices. It highlights the impact of weak crude prices on Scotland’s business services sector.

Fraser of Allander has cut its growth forecast for Scotland for 2015 from 2.5 per cent in June to 1.9 per cent. It has reduced its prediction of expansion in 2016 from 2.3 per cent to 2.2 per cent.

Paul Brewer, PwC government and public sector leader in Scotland, said: “While it is encouraging to see Scottish Government’s ongoing focus on infrastructure investment and hard evidence of the positive impact this is having on our construction industry, unless this is sustained over a long period of time there is a risk we will become increasingly exposed to shortfalls in the service sector. 

“Productivity is also key to future economic success and it’s vital that issues such as enhancing skills, particularly in relation to Scotland’s core and emerging sectors, and innovation are addressed if we are to see any meaningful and sustained uplift."