SCOTLAND’S economic growth is likely to slow significantly this year, as Brexit-related uncertainty takes its toll, a leading think-tank has warned.

The EY (Ernst & Young) Scottish ITEM Club is forecasting that non-oil gross domestic product growth north of the Border will slow further to just one per cent this year, from an already below-trend 1.3% in 2018. It cites the impact of Brexit uncertainty on households and businesses as a key factor.

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The think-tank predicts Scottish growth will pick up to 1.3% in 2020 and then accelerate to 1.6% the following year. It also projects 1.6% growth in 2022.

However, it warned the main risks to its forecast “originate beyond Scotland, particularly in the immediate short term”, adding: “The most obvious continues to be a no-deal Brexit.”

And EY Scotland managing partner Ally Scott warned of the impact on Scottish companies even if a Brexit deal were agreed.

Mr Scott said: “Scottish consumer confidence and business sentiment are expected to weaken this year, with the global economy and Brexit uncertainty major causes. Even if a Brexit deal is agreed in the coming months, difficult trade negotiations are likely to follow. This, combined with other global worries, means that Scottish companies are likely to remain very cautious in their investment and employment decisions.”

The EY Scottish ITEM Club also highlights the expectation that the working-age population north of the Border will decline, with lower net migration a key driver of this fall. And it declares that net inward migration, while already declining, “will be much lower than in recent years”.

The EY Scottish ITEM Club warns companies could consequently face growing skills shortages, but also notes that this may increase the speed of adoption of new technologies such as robotics and artificial intelligence.

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The think-tank predicts the “mini-boom” in Scottish manufacturing last year “looks unlikely to persist through 2019”. It forecasts there will be no growth in factory output this year, except in the food, beverages and tobacco sub-sector.

Scotland’s unemployment rate is projected to fall from 3.9 per cent in 2018 to 3.7% in 2022.

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Employment in Scotland is forecast to rise by 2% by 2022. The think-tank noted that nearly half of the projected 53,000 net rise in Scottish employment over the 2019 to 2022 period was accounted for by professional, scientific and technical services, and administrative and support services sectors.

These two sectors, together with information and communications, are expected to be “drivers of growth in the Scottish economy, both in 2019 and beyond”.