THE Scottish economy grew faster than the UK’s at the start of 2018, but has been more sluggish in the medium-term than previously thought, according to the latest data.

The SNP Government issued revised figures for Scottish GDP in the first three months of the the year showing the economy grew by 0.4 per cent, twice the UK rate of 0.2 per cent.

Scottish GDP growth, which was estimated in June to have been 0.2 per cent in the first quarter, was uprated after statisticians incorporated fresh data and improved methods.

The Quarterly National Accounts Scotland (QNAS) also updated the last year of Scottish GDP growth from 0.8 per cent to 1.3 per cent.

An uptick in North Sea growth and exports were partly responsible.

SNP Finance Secretary Derek Mackay said the numbers were “hugely encouraging”.

However QNAS also revised GDP figures going back to 1998, and these showed some significant downward revisions to growth in 2014 and 2015.

A key factor was a massive correction for construction sector growth, which had been grossly overestimated.

Previous growth of 34 per cent over 2014 and 2015 was revised down to just 6 per cent.

Overall, the changes meant Scottish GDP growth since 2010 is now below 1 per cent a year, slightly lower than previously estimated.

The figures coincided with the latest inflation data showing UK prices grew by 2.5 per cent in July, after three months at 2.4 per cent, the first jump in the CPI measure since November.

The higher RPI measure of inflation, which includes housing costs, fell from 3.4 to to 3.2 per cent, setting the benchmark for rail fare increases in the New Year.

The Office of National Statistics said transport tickets, fuel and computer game prices drove up costs, while prices of women's clothing, footwear, and some financial services fell.

Mr Mackay said: “It is hugely encouraging to see the Scottish economy grow by 0.4 per cent in the first quarter of 2018, meaning that over the year since 2017 Quarter 1, the Scottish economy has grown by 1.3 per cent.

“Figures for the first quarter of 2018 also show that manufactured exports, which make up around half of the total value of exports from Scotland to the rest of the world, have grown by 3.6 per cent, reflecting the strength of international exports to the Scottish economy.”

Scottish Chambers of Commerce chief executive Liz Cameron added: “This is great news for Scotland, but concerns remain that the construction industry continues to experience falls in output, with GDP also remaining below historical growth trends.

“The upcoming Programme for Government presents a critical opportunity for the Scottish Government to invest in our national infrastructure, in order to jumpstart our construction sector and provide the foundation for increased growth rates for the entire economy.”

QNAS put Scotland’s onshore GDP in 2017-18 was £156.5bn, or £28,797 per person, or £170.4bn (£31,367 per person) including a geographical share of North Sea oil and gas.

With the revival in the oil price, North Sea related GDP grew by 14 per cent over the last year, with tax revenues rising from almost nil in 2015/16 and 2016/17 to £1.33bn in 2017-18.

Economist John McLaren of Scottish Trends said the revisions to the GDP growth trend had smoothed out previous anomalies, but said it was a concern the construction sector figures had been so badly off the mark.

He said: “The revised figures for Scottish GDP show a better performance of late than had been previously estimated but the post recession performance remains poor, in fact overall worse than before.

“The huge revisions to construction output are a worry but at least seem to make more sense than the 34 er cent growth in two years that had been estimated earlier. Such large and late revisions make it difficult to seriously analyse Scottish economic performance.”

Tory MSP Murdo Fraser said: "Despite all the revisions up and down, one thing is clear - over the last few years, Scotland's economy has under-performed.

"We need to see focussed government action supporting enterprise, and a tax system that incentivises entrepreneurs to make Scotland their home.

"Unfortunately, Nicola Sturgeon's anti-growth agenda proposes the exact opposite - a compete muddle of an economic plan and a tax regime that taxes jobs and investment.

"We need less talk of independence - and more action to sort out Scotland's economy."

Scottish LibDem economy spokesperson Carolyn Caddick said Mr Mackay was "getting rather overexcited" over growth of just 1.3 per cent in a year, while Scotland's productivity continues to lag.

"What the Scottish economy needs is a transformative investment in the services that allow everyone to make the most of their talents, like education and mental health. 

"That would do far more to build a highly skilled, high wage society than a Finance Minister who leaves millions of pounds sat in government bank accounts waiting to be spent on another independence campaign."

Howard Archer, chief economic adviser at EY ITEM Club, described the inflation data as "disappointing but not unsurprising" for families.