Grangemouth dispute ‘cost Scots economy £65m’

The bitter dispute at the Grangemouth oil refinery and petrochemical plant last year cost the Scottish economy at least £65 million, new figures show.

Scottish GDP rose by just 0.2 per cent in the final quarter of 2013, which coincided with the shutdown of the massive plant for several weeks last October.

Scottish Government figures yesterday showed the dispute contributed to a fall of 0.2 per cent in the headline growth rate for the quarter, worth an estimated £60m to £65m.

Scottish growth was barely a quarter of the UK’s 0.7 per cent level, when the two are normally closely aligned.

Experts said growth was affected by the sharp fall in production at Grangemouth, with output in petrochemicals down

10.8 per cent.

However, Alex Salmond said the episode showed the “underlying strength” of the economy north of the Border, which continued to grow despite the damage done by the dispute. “Last year’s temporary shutdown at Grangemouth had a substantial effect on our economy but even with that, there have been strong signs of recovery and 2013 saw the fastest annual growth since 2007,” he said. “We expect to see a further increase on these figures in the first-quarter 2014 figures which are due in July.”

The First Minister said the GDP statistics, along with rising employment, painted a “picture of recovery” in Scotland. Overall, the Scottish economy grew by 1.7 per cent, compared with 2.7 per cent in the UK as a whole.

Scottish Secretary Alistair Carmichael said: “It is concerning to see the impact this one industrial dispute had on Scotland’s performance. The Grangemouth effect is a real-life reminder of why it is better to be part of a larger economy where we spread risks and share rewards with all other parts of the UK.” The total value of Scotland’s GDP is an estimated £128 billion. A loss of 0.2 per cent from the dispute over one quarter would cost around £60m to £65m.

Professor John McLaren, of the Centre for Public Policy for Regions, said Scotland’s economic recovery was taking place at a “historically slow rate”. He added: “Since 2007, economic growth has been more concentrated in the production sector in Scotland, in comparison to the UK, and less so in services.”

The Scottish Government said the Grangemouth effect was likely to be larger still due to indirect effects on supply-chain industries. Output in services grew by 0.6 per cent. Total output in the production sector contracted by 0.7 per cent, while construction fell 1 per cent.

The Grangemouth saga pitted owners Ineos against the Unite union over the treatment of shop steward Stevie Deans. Ineos announced the plant’s closure with the loss of 800 jobs as the dispute escalated. A U-turn by Unite saw a rescue deal accepted.

• In an earlier version of this article we reported that the Grangemouth closure resulted in a loss of £250m to the Scottish economy. We apologise for this error.