Scottish growth will fall from 1.8% in 2016 to 0.9% in 2017 and for the UK from 2.1% this year to 1.2%.
The UK-wide slowdown is blamed in particular on “the drag on investment from increased political and economic uncertainty following the Brexit vote”.
PwC’s UK Economic Outlook, however, expects Scotland and the UK to avoid recession.
It expects inflation to rise to about 2.7% by the end of next year as the effects of a weaker pound fed through to consumers, squeezing real spending power.
PwC chief economist John Hawksworth said: “A decline in business investment is likely to be the main reason for the slowdown in real GDP growth next year, driven in particular by uncertainty about the UK’s future trading relationships with the EU.
“We expect Brexit to exert a long, slow drag on growth, rather than giving the economy a short, sharp shock.”
The firm’s government and public sector partner Paul Brewer said the Scottish figures highlighted a need for further focus on the nation’s key sectors “to ensure that the current flirting with recession is as close as we get”.
Prospects for jobs continue to be weak and it is the only region of the UK where employment is expected to fall.
Brewer said official job figures for June to August showed the economic inactivity rate – the proportion of people not in employment or actively looking for work – for working-age adults fell UK-wide compared to the previous year.
But for Scotland the trend is in the other direction.
“When you break down the Scottish figures, you see that the inactivity rate for men has only increased very slightly over this period from 17.9% to 18%, but the female rate has risen much more markedly from 24.5% to 26.5%,” he said.
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Two days of selling last week wiped out more than $1 trillion across global bond markets, the worst rout in nearly 18 months, according to Bank of America Merrill Lynch.
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