'Modest' growth sees Scotland avoid double-dip recession

The latest statistics showed that the country's economy barely grew in the first three months of this year, after a sharp fall at the end of 2010.

Scotland's economy struggled compared to the UK's growth of 0.5 per cent in the latest quarter.

In particular, the Scottish construction sector suffered, with output falling by 3.6 per cent while the production and service sectors both grew.

The GDP figures also showed that Scotland's production sector increased by 0.9 per cent while the rise in the service sector was 0.3 per cent. Businesses leaders criticised the "decidedly modest" growth figures, with one industry body warning that Scotland's output was "nose-diving".

David Lonsdale, assistant director of CBI Scotland, called on the Scottish Government to be "less reliant" on public spending and to do more to boost the country's private sector.

He said: "The decidedly modest rebound in growth in the first quarter of this year reaffirms our view that Scotland's economic recovery continues to be choppy and lacks vigour.

"Expansion in some sectors is being offset by weaker performance in others, with the contraction in construction reflecting an overhang from the appalling weather experienced this past winter.

"We continue to believe, however, that the economy can further improve this year and next but that the pace of growth is likely to be sluggish."

Michael Levack, chief executive of the Scottish Building Federation, warned that the recovery appeared to be fragile with the decline in the construction industry's growth figures.

He said: "Following some tentative signs of recovery, Scottish construction industry output appears to be nose-diving again. We need further government action on bank lending, on affordable housing investment and on securing Scottish borrowing powers for capital investment to prevent this downward trend from continuing for the remainder of 2011."

Finance secretary John Swinney blamed the "severe winter weather" for poor figures in areas such as construction.

He said: "The Scottish economy returned to growth in the first quarter, and since then Scotland's labour market has outperformed the UK as a whole - with lower unemployment and lower economic inactivity north of the Border - but both the GDP and jobs figures show that there can be absolutely no grounds for complacency.

"While there was a further fall back in the construction sector in the aftermath of the severe winter weather, it follows previous quarters of strong growth, with construction output up significantly over the year."