By Ian McConnell

Business Editor

THE SCOTTISH economy grew by 4.7 per cent quarter-on-quarter in the three months to June, and gross domestic product was up by 21.7% on the same period of last year, official figures have revealed.

Scottish Economy Secretary Kate Forbes said the data show the economy north of the Border is continuing its recovery from the global coronavirus pandemic but underlined “obstacles” facing sectors such as retail, tourism and hospitality.

Quarter-on-quarter growth in Scotland was marginally adrift of the 4.8% recorded for the UK as a whole by the Office for National Statistics. UK GDP in the second quarter was up by 22.2% on the same period of 2020.

In the second quarter of last year, economic output in Scotland and the UK as a whole was reduced dramatically by strict lockdowns to curb the spread of coronavirus. The Scottish Government observed that, in the second quarter of last year, the “economy was at its lowest point after the initial impacts of Covid-19”.

Both Scotland and the UK as a whole saw significant easing of coronavirus-related restrictions during the second quarter of this year – following a protracted winter lockdown which extended into spring – with the reopening of retail outlets and hospitality venues among key economic developments.

The Scottish Government, publishing its latest GDP figures yesterday, noted the largest single contribution to the rise in economic output in the second quarter came from growth in the distribution, hotels and catering category.

READ MORE: Brexit shortages: Ian McConnell: Will anything make Boris Johnson see and tackle sad shambles?

The rebound in Scottish GDP in the second quarter followed a 1.8% quarter-on-quarter decline in the opening three months of this year, amid the winter lockdown. UK GDP fell by 1.6% in the first quarter.

Offshore oil and gas extraction output is not included in the Scottish GDP data but does figure in the UK headline numbers, the Scottish Government noted.

READ MORE: Two takes on furlough...sadly Rishi Sunak’s one will mean misery

Scottish services sector output climbed by 5.2% quarter-on-quarter in the three months to June, the latest GDP figures show.

Production output rose by 3.5% quarter-on-quarter, with the construction sector growing by 3.3% and agriculture, forestry and fishing expanding by 0.4%.

Commenting on the GDP figures, Ms Forbes said: “Today’s first estimate of a 4.7% increase in GDP for quarter two 2021 is a tribute to the adaptability and resilience shown by so many businesses during the pandemic. It is clear to see the growth in the second quarter reflects the removal of lockdown restrictions, increased mobility and the acceleration of the vaccination programme.”

However, she added: “The pandemic is not over. Challenges remain and some sectors such as retail, tourism and hospitality still face obstacles on the road to recovery. But this GDP estimate clearly shows that Scotland’s economy is continuing its recovery from the global pandemic as we work with business and trades unions to build a greener, fairer and more prosperous economy with wellbeing at its core.”

Scottish Secretary Alister Jack said: “Today’s figures indicate that we are moving in the right direction, but there are still challenges ahead as we prioritise a strong, sustainable recovery.”

The Scottish Government noted the coronavirus pandemic had “led to a number of challenges in collecting the data to calculate GDP”.

It added: “As a result, GDP estimates for this quarter are subject to more uncertainty than usual and may be more prone to revision over time.”

A survey published this week showed Scotland recorded the fastest economic growth of any of the UK nations and regions in August.

Royal Bank of Scotland’s seasonally adjusted business activity index for the private-sector economy north of the Border rose from 57.5 in July to 58.1 in August, moving further above the 50 no-change mark to top the table of the 12 UK nations and regions.

This index is a combined measure of manufacturing and services sector output.

Employment in Scotland’s private-sector economy grew for a fifth straight month in August and, although the pace of job-creation eased, it remained sharp, the survey showed.

Putting Scotland’s performance in a UK-wide context, Royal Bank said: “Business activity growth eased across the majority of regions for the third month in a row in August. Only Scotland, which recorded an index reading of 58.1 and topped the rankings narrowly ahead of Wales (58.0), saw a faster rate of expansion than in July.”