THE Scottish economy outperformed the UK as a whole in the fourth quarter of 2018, latest official figures reveal, and is projected by PricewaterhouseCoopers to continue its superior showing this year.

Scottish gross domestic product grew by 0.3% in the final three months of last year, marking the eighth consecutive quarter of expansion, but the pace of advance was significantly weaker than the long-term average, as Brexit uncertainty weighed. UK GDP grew by only 0.2% in the fourth quarter.

Over 2018 as a whole, both Scotland and the UK as a whole grew by 1.4%. The Scottish economy had expanded by 1.5% in 2017.

PwC forecasts, in a report published today, that growth this year will be slightly faster in Scotland than in the UK as a whole. However, growth in both Scotland and UK-wide is projected by the accountancy firm to slow this year, with PwC citing the dampening impact of Brexit.

The accountancy firm forecasts Scottish growth of 1.2% this year, on a par with London and south-west England, with only the south-east projected to achieve greater expansion, of 1.3%.

PwC projects expansion of 1.1% in the UK as a whole in 2019, and forecasts growth of only 0.8% for north-east England and Northern Ireland.

Lindsay Gardiner, chairman of PwC in Scotland observed that “macroeconomic factors relating to Brexit” would likely “come to a head” this year, before expansion in Scotland accelerated to the 1.6% rate projected by the accountancy firm for next year. UK growth is also forecast at 1.6% in 2020.

Scotland outperformed the UK as a whole in the fourth quarter of last year in spite of the dampening impact on electricity supply of reactors at the Hunterston B nuclear power station in Ayrshire being offline.

Electricity and gas supply dropped by 4.5% quarter-on-quarter in the final three months of last year. This was a key factor in an overall 0.9% fall in production, with manufacturing output having risen by 0.1% during the fourth quarter.

Scottish construction output rose by 0.8% in the final quarter of last year, while the services sector grew by 0.5%.

The Scottish economy grew by only 0.6% and 0.4% respectively in 2015 and 2016, when the North Sea downturn and its knock-on effects weighed heavily on overall activity.

Economist John McLaren, who runs the Scottish Trends website, said: “It now looks like the Scottish economy seriously underperformed in 2015 and 2016 but since then, 2017 and 2018, has returned to growth on a par with that of the UK as a whole, although still below the historical average.”

He added: “The main culprit for the 2015 and 2016 underperformance may well be the downturn in North Sea oil and gas activity, in particular with respect to the manufacturing sector of metal products and machinery.”

Tracy Black, director of the Confederation of British Industry in Scotland, said: “While the latest stats show eight consecutive quarters of growth, overall economic momentum remains worryingly weak. What we desperately need is a step-change if the Scottish economy is going to deliver on higher wages, improved living standards and increasing the potential for stronger, sustained growth in the future. An economy that’s barely in first gear isn’t going to cut the mustard.”

She added: “Brexit uncertainty continues to be a significant factor behind weaker growth. However, the recipe for Scottish economic success remains the same as it’s always been: strong partnership between government and business, focused investment in areas that can boost productivity, and building a competitive business environment that helps the private sector.”

A CBI survey yesterday showed UK manufacturing output growth in the quarter to March was at its weakest since last spring.