THE Scottish economy virtually flatlined in the second quarter of 2017, with GDP growing at just a third of the rate in the rest of the UK, according to official figures.

The latest GDP data showed growth of 0.1 per cent between April and June north of the border, compared to a 0.3 per cent rise in the UK economy.

Although the service sector, the bulk of Scotland’s economy, grew 0.7 per cent in Q2, construction slumped by 3.5 per cent, meaning it has shrunk for 18 consecutive months.

Initially put at 0.8 per cent, Q1 Scottish GDP growth was also revised down to 0.6 per cent.

The UK economy also grew three times as much as Scotland’s over the year to June - up 1.5 per cent against 0.5 per cent.

Business leaders described the Scottish figures as “lacklustre” and indicative of a “fragile” economy.

The Tories said the SNP was “badly letting down” business.

Economy secretary Keith Brown said: “Although this is more modest growth than we would ideally like to see, it is particularly pleasing to see growth over the first half of the year in industries linked to the oil and gas supply chain, which provides more evidence that confidence is gradually returning to the sector.

“Additionally we are seeing strength in Scotland’s services sector.

"While construction output continues to adjust as a number of major infrastructure projects have reached completion, it remains significantly higher than in 2014.

“The single biggest threat to our economy as a whole remains the lack of clarity from the UK Government over Brexit.”

Scottish Secretary David Mundell said: “Scotland’s economy still lags behind that of the rest of the UK. The Scottish Government needs to use the considerable levers they have to increase Scotland’s prosperity.”

Tory economy spokesman Dean Lockhart added: “Alarm bells should be ringing for the Scottish Government, particularly as new powers mean our public services are becoming more dependent on the performance of the economy.

“Three months ago when a blip saw Scotland edge in front of the rest of the UK, the SNP furiously patted itself on the back.

“Now the wider trend is apparent, the nationalists should explain to the businesses and hard workers of Scotland why they are so badly letting them down.”

Labour MSP Jackie Baillie said: “The economic growth figures are anything but good news.

“They show almost no growth in the Scottish economy, and particularly disappointing figures for the construction industry.

“Year-on-year we lag behind the rest of the UK’s growth, which itself is nothing to crow about, with Scottish economic growth a third of the UK as a whole.

“The complacency of the Nationalists, who have hailed these figures as good news, is breathtaking at a time when the Scottish economy remains on the cliff edge of recession.”

Scottish LibDem leader Willie Rennie said: “These figures show there is no room for the Scottish Government to start celebrating. The SNP are presiding over an erratic economy.”

Professor Graeme Roy, Director of the Fraser of Allander Institute at the University of Strathclyde, said the figures underlined “just how fragile growth the Scottish economy is”.

He said: “In five of the last six quarters, Scottish growth has been just 0.1 per cent or lower.

“At the same time, the strong growth witnessed in Q1 has been revised down from its initial estimate of 0.8 to 0.6 per cent.

“Over the year, the Scottish economy has grown around 1/3 of the equivalent UK rate.”

Prof Roy said the “one significant bright spot” was the strength of Scotland’s services sector.

Ewan MacDonald-Russell, of the Scottish Retail Consortium, said: “It’s clear this growth is fragile. With significant inflationary pressures hitting both businesses and consumers, there can be no complacency about the challenges which Scotland faces.”

Andy Willox of the Federation of Small Business said the figures were “lacklustre”.

He said: “Business confidence in Scotland, and across the UK, fell sharply in the third quarter of this year, with firms pointing to spiralling overheads and political uncertainty associated with Brexit.

“The Scottish Government must signal their commitment to boosting growth by guaranteeing no new burdens on firms until after the Brexit transitional period.”

Economist John McLaren of Scottish Trends said: “Over the last 10 quarters, notable growth in the Scottish economy has been restricted to two quarters, with the remainder exhibiting essentially no growth. This remains a worrying trend.

“For the Economy Secretary of the Scottish Government to describe the 0.1 per cent quarterly increase as ‘good news’ suggests that he considers such a poor performance to be acceptable. Surely that cannot be the case.”