GDP latest: Scottish economy shrinks by 0.3% in February as UK grows by 0.1%

Ironing out volatility, GDP in Scotland is estimated to have grown by 0.4 per cent in the three months to February.

Scotland’s economy is likely to have shrunk by 0.3 per cent in February, according to official figures, in stark contrast to UK growth of 0.1 per cent.

The Scottish Government estimates show that gross domestic product (GDP) - a measure of total economic output - fell back in the second month of 2024, having seen growth of 0.6 per cent in January. Recent figures from the Office for National Statistics (ONS) revealed that UK GDP grew by 0.1 per cent in February.

Monthly figures can be volatile and for the three months to February, GDP in Scotland is estimated to have grown by 0.4 per cent, when compared with the previous three-month period.

The latest GDP data throws up some differences between the Scottish and UK economies.

In its report, the Scottish Government noted: “Although monthly GDP has fluctuated recently, the trend in underlying quarterly GDP has been broadly flat since the end of 2021.”

The latest figures show that GDP only grew by 0.1 per cent over the course of 2023, with this revised down from an initial estimate which said the economy had grown by 0.2 per cent. The GDP data for the final three months of 2023 has been revised, with the economy now said to have fallen by 0.5 per cent over this period - compared with a previous estimate pointing to a 0.6 per cent contraction.

Alister Jack, the UK government’s Secretary of State for Scotland, said: “Long-term sustainable growth remains our goal, and with inflation expected to fall to our 2 per cent target soon, we’re on track to achieve that. We must stick to our plan. Just this week, 2.4 million Scottish workers saw the benefit of the second 2p National Insurance cut, meaning a saving of £833 a year for the average worker. That’s on top of the biggest ever increase to the national living wage.

“The UK government is now investing more than £3 billion directly into communities across the whole of Scotland, boosting trade and encouraging opportunity throughout the UK.”

Scottish Wellbeing Economy Secretary Mairi McAllan said the latest GDP figures showed the “challenging global economic conditions we continue to face” but stressed that the “overall outlook is of strengthening growth in Scotland’s economy”.

She said: “The three months to February saw growth of 0.4 per cent. Looking ahead, the Scottish Fiscal Commission forecast economic growth to strengthen moderately across 2024 and 2025. The latest indicators provide an encouraging start to the year with more new businesses, stronger business activity and ongoing resilience in the labour market.”

She added: “The Scottish Government is investing over £5bn through its 2024-25 budget to drive an economy that is fair, green and growing.”

April’s ONS figures showed that UK GDP was estimated to have risen by 0.1 per cent in February. At the same time, the previous estimate for January of 0.2 per cent growth was revised up to 0.3 per cent.

The UK economy appears to be putting the 2023 recession behind it in the new year. A recession is defined by at least two quarters in a row where the economy contracts.

GDP reaction: UK economy remains in fragile state despite retreating further from recession