Scotland's economy escapes recession and out performs UK

Scotland's economy has avoided recession after growth soared in the first three months of this year.

The Scottish economy grew by 0.8 per cent in the first quarter of 2017. Picture: David Davies/PA Wire

Scottish Government ministers were braced for bad news after experts warned last week that the chance of a Scottish recession was “in the balance”. But the 0.8 per cent growth is four times the rate of UK GDP growth over the same period.

On an annual basis, though, Scotland saw growth of just 0.5 per cent, compared to 1.9 per cent UK-wide. Scottish economy secretary Keith Brown said: “The fundamentals of Scotland’s economy are strong. Scotland’s output is now 6 per cent above the pre-recession level and unemployment is at its lowest ever level.

“Since late 2014 our growth rate has been impacted significantly by the fortunes of the North Sea with around two thirds of the slowdown in 2016 attributed to the onshore impact of lower oil prices. Today’s figures show a rise in output in industries linked to the North Sea for the first time since 2014. While there is no room for complacency, these figures – alongside a number of recent business surveys – indicate that there is growing confidence in the sector.”

The resumption of steel production at Dalzell has been at the heart of the recovery after the Scottish Government helped pave the way for its takeover by Liberty House.

“This has helped drive an expansion in manufacturing in the first quarter, with production increasing by a massive 3.1 per cent” said Brown.

The growth figures mark the highest rate of quarterly growth in Scotland since the end of 2014. Services in Scotland grew by 0.3 per cent in the first quarter, although it was more gloomy news for the construction industry which shrank by 0.7 per cent.

Mr Brown added: “The re-opening of Dalzell is just one of the actions the Scottish Government is taking to boost manufacturing – we are also supporting for expansion of the aluminium smelter at Lochaber and the development of a new manufacturing centre in Renfrewshire.”

Sciottish Secretary David Mundell said the recovery was “very encouraging”.

He said: “The Scottish economy is returning to growth and I am pleased to see that the manufacturing sector in particular is making the most of export opportunities. But, over the year, Scotland has continued to lag behind the UK as a whole – so there is still a lot of work to do.

“The Scottish Government has extensive powers at their disposal to support the economy and these figures underline the need for our two governments to work together as we prepare to leave the EU.

“Brexit will bring new opportunities. We need to ensure Scottish business can take full advantage.”

Liz Cameron, head of the Scottish Chambers of Commerce, said the figures are a “huge sigh of relief”.

She added: “The most significant contributor to this recovery has been the production sector and this reflects the positive signals that we have been detecting from Scotland’s manufacturers over recent months and, indeed, the returning signs of confidence from the oil and gas supply chain.

“This represents the best quarter of growth for the Scottish economy since before the effects of low oil prices began to emerge in 2015 and sparks hope for the future after a stagnant two years of anaemic economic performance.”

Andy Willox, the Federation of Small Business’ Scottish policy convenor, said: “Feedback from members suggests Scottish small business confidence is growing, so perhaps we shouldn’t be surprised by these encouraging economic figures.”