How Scotland avoided recession '“ and what it means for the SNP

Scotland has managed to avoid recession '“ in previous years this would not have been either particularly noteworthy nor a cause for celebration.

First Minister  Nicola Sturgeon was under pressure ahead of the figures being announced. Picture: Getty
First Minister Nicola Sturgeon was under pressure ahead of the figures being announced. Picture: Getty

Today’s announcement, however, that the Scottish economy grew by 0.8 per cent, was greeted with relief in business quarters and the SNP.

The country would have entered recession had today’s figures shown that the country had experienced negative growth (or contraction) for the second successive quarter.

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Rival politicians seemed geared up to expect that outcome, with furious missives urging Nicola Sturgeon to prioritise growth over her now-delayed plans for a second referendum on independence.

Opposition leaders, who have been blaming the First Minister for Scotland ‘standing on the brink of recession’ will now need to re-tool their arguments after the SNP Government oversaw a better growth than the rest of the UK.

With scarcely concealed glee, SNP politicians are now demanding that the Scottish Government is credited for that turnaround.

How did Scotland avoid it? And what impact will the growth figures have on our fractious political situation? We look at the fallout.

Not recession-proof

Recession is officially defined as two consecutive quarters of negative growth, something Scotland last experienced in 2012.

Previously, as pointed out by the Conservatives in Holyrood, the UK was growing at a much faster rate than Scotland.

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Scotland's economy escapes recession and out performs UK

While the modest growth of 1.8 per cent in the whole of 2016 wasn’t quite ‘powering ahead’, as claimed by the Tories’ economy spokesman Dean Lockhart, it was significantly higher than the 0.4 per cent growth of Scotland’s economy.

It is clear that the turnaround was fuelled by the growth of production, which expanded by 3.1 per cent, offsetting the contraction in construction of 0.7 per cent.

The service sector experienced modest growth of 0.3 per cent, which compared favourably with the UK sector’s contraction of 0.4 per cent.

Experts from Strathclyde University’s Fraser of Allander institute did warn that although the figures were welcome, the Scottish economy still faces “a fragile outlook”.

Political reaction

Given the previous economic outlook was far from rosy, its safe to assume that a number of politicians opposed to the SNP may have been swiftly editing statements this morning.

The damning comments prepared for an exocet of economic gloom striking Scotland was replaced by language that still slammed the SNP Government, even as Scotland outperformed the UK.

Labour termed today’s news as a narrow escape for the economy, again casting it as fragile, as per the Fraser of Allander experts.

The Conservatives, who had warned as recently as yesterday of a number of steps the SNP had to take ‘on the brink of recession’, did little to temper their language.

Their statement charged the SNP with ‘dragging Scotland halfway to recession’.

Government reaction

Its safe to say that the SNP are pleased with the news.

While they will give the usual health warnings about a lack of complacency, Nicola Sturgeon’s Ministers knew they were relative hostages to fortune as far as today’s figures go.

Buoyed by this data, and helped by the announcement that the initial timetable for Indyref2 has been torn up, the SNP will feel more secure refuting opposition claims that they have taken their eye of the ball.

Good economic data might seem abstract to the average punter, especially someone struggling with stagnant wages and high inflation, but they are a huge boon for Governments.

Nicola Sturgeon, who has endured her toughest spell in office since the General Election of last month, will feel more secure when confronted with the charge from Labour and the Conservatives that her party should ‘focus on the day job’.

These figures might not cure the Scottish economy of its long-term ills, nor leave an economic foundation for generations, but in political terms, they might have helped save the First Minister’s job.