SCOTLAND’S economy grew less than previously thought over the summer, after new figures identified "an underlying slowdown in the rate of recovery".

Scottish Government statisticians said the country’s economy grew by 0.4 per cent in September, compared to 0.6% for the UK as a whole.

It means Scottish output is estimated at 1.1% below pre-pandemic levels compared to the UK economy being 0.6% below the level of February 2020, prior to lockdown.

The monthly GDP estimate for Scotland also revised down two recent growth figures.

A previously reported 0.1% fall in Scottish GDP in July was downgraded to a 0.3% fall, and a 0.1% increase in August was downgraded to a 0.1% fall.

The Scottish Government said this reflected “an underlying slowdown in the rate of recovery” after the initial rebound following the lifting of Covid restrictions in the spring, plus "the influence of volatile industries such as energy supply".

While the Scottish economy is estimated to have grown by 5.6% in the second quarter (April to June) growth was just 0.8% in the third quarter, from July to September. 

In quarterly terms output is now 2.1% below the pre-pandemic level in 2019 Quarter 4.

In September.

The services sector, which accounts for three-quarters of the economy, grew by 0.5% in September, with increases in nine of its 14 subsectors.

The sector’s biggest contributor to growth in September was health and social work, up 3.7%, followed by arts and culture (+3.6%) and accommodation and food (+2%).

The biggest negative factor was education (-2.1%) as schools were hit by Covid absences.

The production sector, some 16% of the economy, shrank by 0.9% in September, with falls in two of the four subsectors, which offset growth of 0.3% in the manufacturing subsector. 

The biggest negative factor was a 4.7% fall in electricity and gas supply “due to volatility between different modes of electricity generation and maintenance at major power stations”.

Overall production sector output remains 4.8% below pre-pandemic levels, compared to a 0.4% negative difference in the services sector.

However there was better news in in the construction sector, which accounts for around 6% of the economy, and is provisionally estimated to have grown by 1.9% in September, its first increase since June, returning it to pre-pandemic levels.

SNP Finance Secretary Kate Forbes, who presents the draft Scottish budget for 2022/23 on December 9, said: “These latest GDP figures underscore Scotland’s continuing economic recovery from coronavirus.

“GDP grew 0.4% in September, leaving output just 1.1% below the pre-pandemic level of February 2020. 

“Output in the service sector, which accounts for around 75% of the economy, rose by 0.5% and growth was also recorded in manufacturing and construction.

“Over the coming weeks I will deliver a Budget to help households, communities and businesses across the country and launch our National Strategy for Economic Transformation, setting out how Scotland will harness innovation and entrepreneurship to create green, fair and sustainable jobs over the next decade.  

“Challenges remain, but the indicators show we are in a strong position from which to drive Scotland’s economic recovery and renewal.”

Scottish Secretary Alister Jack said: “Economic activity levels in Scotland and the UK more widely are moving in the right direction but there is much more to be done as we recover from the pandemic.

"That's why we are levelling up right across the UK. 

"The announcement of £41 billion per year for the Scottish Government in the Autumn budget is delivering the largest annual funding settlement, in real terms, since devolution. 

"Plus, we’re investing more than £172million in projects in communities throughout Scotland from three major new funds.

“People are getting back to work with the help of our Plan For Jobs and the Universal Credit taper rate cut will benefit hard-working families everywhere.

"All this comes on top of the UK Government’s unprecedented package of support which has seen an additional £14.5billion funding provided to the Scottish Government through the pandemic.

“We remain focused on a sustained recovery.”

Output in the construction sector, which accounts for around 6% of the economy is estimated to have grown by 1.9% in September. In quarterly terms, construction output is provisionally estimated to have fallen by 1.5% compared to Quarter 2.