The rate of Scottish economic growth has slowed, new figures indicate.

Scottish Government gross domestic product (GDP) estimates for quarter three, covering July to September 2018, indicate the economy grew by 0.3% in real terms compared to the previous quarter.

However, the rate of growth has dropped marginally from 0.5% in the second quarter and is behind the growth rate of the UK as a whole at 0.6%.

The figures show that over the year compared to the third quarter of 2017, the Scottish economy has grown by an estimated 1.5% – the same as the estimated rate for the UK.

One driver behind Scotland’s 0.3% increase in quarter three was rising output in the construction sector, which grew by 2.7%.

Services sector output grew by 0.3% in the same period, but production output dropped 0.7% and agriculture, forestry and fishing output fell 1.1%.

Finance Secretary Derek Mackay said it is “great news” the Scottish economy continues to grow, but he warned of the risk posed by Brexit.

He said: “GDP has increased for the fifth consecutive quarter and when compared to the same period last year, has increased by 1.5%.

“Last week I set out the important steps the Scottish Government is taking to continue these positive trends.

“Our budget will deliver the economic investment people expect and will continue to grow the Scottish economy.

“However, the key risk to Scotland’s economy over the next six to 12 months continues to be the uncertainty associated with Brexit, and in particular the risk of a ‘no-deal’ Brexit, which is impacting on business confidence and investment.”

Finance Secretary Derek Mackay
Finance Secretary Derek Mackay warned of Brexit uncertainty (Andrew Cowan/Scottish Parliament/PA)

Scottish Secretary David Mundell said: “I am pleased the latest GDP figures show the Scottish economy growing, but I am concerned Scotland is lagging behind the rest of the UK.

“I urge the Scottish Government to use the vast powers at its disposal to close this growth gap.”

He added his party’s priority is to deliver the Prime Minister’s Brexit deal as it will “protect jobs and prosperity”.

Economist John McLaren warned Scotland’s economic forecast is gloomy.

He said: “Scotland’s relatively good economic performance in 2018 has stalled somewhat in quarter three, with much of the recent advantage gained over the UK having been lost as manufacturing fell back.

“With a falling oil price and an uncertain Brexit looming, prospects remain poor.”