These rates compare to 3 per cent growth for the UK as a whole in the year to the end of the first quarter of 2007, and 0.7 per cent growth in the first quarter.

Responding to the figures, Cabinet Secretary for Finance and Sustainable Growth, John Swinney, said that Scotland's growth rate had not been good enough.

He said: “Scotland has suffered from being a low growth economy for a generation, and our past growth performance is simply not good enough. Although sectors such as financial services continue to do well, the economy as a whole is underperforming.

“Scotland lags behind the UK as a whole, which in turn lags behind many successful small European nations. The latest increase in GDP may have been deemed satisfactory in the past, but this Government is determined to do better and our ambitions are greater.

“We have set a target to match UK growth by 2011, and these figures demonstrate the scale of the challenge we face.

“Through policies such as reducing and removing business rates and reforming and refocusing our enterprise networks we will begin to end years of underachievement.

“And with the fuller powers of independence, we can do better still. We can give Scotland a powerful competitive edge through lower corporate tax – as has been done so successfully in Ireland and elsewhere – and achieve our aim of increased, sustainable economic growth.”

The figures show that, for the year to the end of the first quarter of 2007, output in service sector in Scotland grew by 2.9 per cent, compared with a 0.8 per cent decrease in the production sector and a 5.4 per cent rise in construction. The UK as a whole in the same period experienced a 3.7 per cent growth in services, a 0.2 per cent growth in production and the construction sector grew by 1.8 per cent.

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