BUSINESS leaders have welcomed signs of improvement contained in the GERS report.

CBI Scotland Director Tracy Black said they showed the public finances continued to “move in the right direction,” thanks in large part to higher oil prices helping the North Sea industry.

Scotland's estimated geographical share of North Sea receipts rose from £266m to £1.3bn last year.

However there were also concerns about the high Scottish deficit.

She said: “Scotland still has room to improve its fiscal deficit compared with the UK as a whole. Only by supporting the private sector to grow the Scottish economy can we deliver the sustainable public services we all want for Scotland.

“Against a backdrop of Brexit uncertainty, we need a relentless focus on the fundamentals – boosting productivity and safeguarding Scotland’s competitiveness.”

Mike Tholen of Oil & Gas said the increase in Scotland’s geographical share of North Sea receipts from £266m to £1.33bn showed a “striking transformation” since the price downturn.

He said: “Improvements to operational efficiency, careful management of costs and a stable fiscal regime have ensured it is better placed to weather volatility in international oil markets. This golden formula must now be maintained as we look to maximise economic recovery.”

Scottish Chambers of Commerce Chief executive Liz Cameron said GERS painted a “mixed picture” with positive signs in oil, but a fiscal position “more challenging than the UK’s”.

She said: “The Scottish and UK Governments both have a part to play in ensuring continued stability for Oil & Gas firms, and investment must continue in the vital infrastructure required to streamline access to markets for businesses.

“Governments must do all they can, in partnership with the private sector, to encourage small and medium sized firms to export and trade with businesses across the world.

“This will further bolster the economy against domestic shocks, and boost our ability to maintain sustainable growth and tackle the fiscal deficit in the long term.”

Gillian Martin, SNP MSP for Aberdeenshire East, said there was growing confidence in the North East, with oil production expected to be 20 per cent higher this year than in 2014.

She said: “The North Sea looks set once again on an upward trajectory, however, we cannot be complacent. With up to 20bn barrels of oil left, the Tory government must use its powers to stimulate exploration and investment, and ensure our oil and gas sector can capitalise on a decommissioning market that is forecast to reach £17bn. It is the least they can do.”

Scottish Green MSP Patrick Harvie said GERS was a reminder of Scotland’s over-reliance on oil and gas extraction when a transition to clean renewable energy was needed.

He said: “While other parties use this annual publication as justification for how Scotland couldn’t be a small, successful independent country, or how great the SNP government thinks it is, they’d do well to remember that both our prosperity and our climate depends on moving to a clean economy.”

Former Tory MEP Struan Stevenson, now Chief Executive of Scottish Business UK, added: “While the figures do show some improvement in Scotland’s finances thanks to a small recovery in North Sea oil, it’s increasingly clear this one commodity cannot be relied upon to deliver stable returns each year.

"Scottish business needs a level of certainty and these figures are a stark reminder of the uncertain future which lies ahead if the proponents of independence continue to gamble with the Scottish economy.”