UK ministers urged to say which powers will be devolved

Economists have urged the UK government to provide more clarity on the powers that will come to Holyrood after Brexit.

The University of Strathclyde’s Fraser of Allander Institute said uncertainty over the negotiations on leaving the EU was the “greatest cloud” on the horizon for the Scottish economy.

The institute’s latest commentary said that while Scotland’s economy returned to growth in the first quarter of 2017, the improvement was on the back of “an exceptionally weak” last two years.

Analysts said growth “remains fragile and well below trend” and while employment is at a record high, household budgets are being squeezed as rising inflation erodes take-home pay.

Director Graeme Roy said: “The latest leading indicators suggest the economy continues to recover, albeit at a relatively fragile pace. We believe Brexit has the potential to act as a long-term brake on Scotland’s growth potential and, to date, very little progress seems to have been made by the UK government in its negotiations with the EU.

“One area the UK government could provide greater 0 Graeme Roy has issued a warning on the economy clarity on is over the specific powers they envisage being transferred to the Scottish Parliament postbrexit.

“This would help enable preparatory discussions between business and the devolved administration. On balance our forecasts are based upon the assumption that a constructive deal between the UK and the EU is reached.

“Should this not occur, outcomes towards the lower-end of our forecast ranges are more likely.”

The report’s forecast for growth in 2018 is the same as in June at 1.4 per cent, while its 2019 forecast has been revised upwards to 1.7 per cent.

Mr Roy said a focus on the “long-term drivers of growth”was “more important than ever”.