Scottish economy grows, but still trails UK

Scotland's economy is continuing to expand but growth remains at half the wider UK rate, official figures today showed.

Keith Brown has called for Brexit clarity. Picture: PA

Economy Secretary Keith Brown blamed Brexit for ongoing uncertainty in the business community, but the UK Government said recent tax hikes imposed by the SNP were holding back growth.

GDP north of the border grew by 0.2 per cent in the third quarter of 2017 after an improvement in manufacturing. This is below the UK level of 0.4 per cent over the same period, but an increase on the 0.1 per cent hike in GDP which Scotland saw in the previous quarter.

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On an annual basis the Scottish economy grew by 0.6 per cent between the third quarter of 2016 and the same period in 2017, while the UK economy increased by 1.7 per cent.

Economy Secretary Keith Brown said the figures show the “resilience” of the Scottish economy in the face of Brexit and the North Sea crash.

“It is encouraging to see the economy grow by 0.2 per cent overall,” he said.

“Our determination to seize opportunity and grow our economy is demonstrated by the £270 million increase on economic spending we announced in the 2018/19 Draft Budget. However it cannot be stressed enough that the single biggest threat to our economy as a whole remains the lack of clarity from the UK Government over Brexit.”

He added: “I would once again call on the UK Government to give people and businesses greater certainty over the Brexit process in order to further stimulate growth in Scotland’s business communities and allow us to continue to attract and retain talent within our workforce.”

In the latest quarter, Services grew by 0.2 per cent and Production grew by 1.2 per cent after a return to growth for both manufacturing, mining and quarrying.

There has been a fall in construction output, today’s figures show, as a result of activity returning to normal levels after completion of major projects like the Forth Replacement Crossing, M8 missing link and the Borders Railway.

Scottish Secretary David Mundell said: “These latest GDP figures show the Scottish economy growing, but much more slowly than we would like, and continuing to lag behind that of the rest of the UK.

“The UK Government is investing - including with an extra £2 billion announced in the Budget - to increase prosperity in Scotland, and I urge the Scottish Government to use its extensive new powers to do the same.

“But its recent decision to make Scotland the highest taxed part of the UK risks damaging, rather than growing, our economy.”

Economist John McLaren said Scotland’s economic performance “continues to disappoint” and the Fraser of Allander Institute said quarterly growth “remains fragile and below trend”.

The Federation of Small Businesses said the economy was “disappointingly slow-moving” while the Scottish Trades Union Congress warned the construction figures show a “serious weakness” in the economy in the wake of Carillion’s collapse.

Labour’s economy spokeswoman Jackie Baillie said: “The complacency of the Nationalists, who have hailed these figures as good news, is breathtaking at a time when the Scottish economy remains in dire straits.”

Greens leader Patrick Harvie said: “GDP gives a very limited insight into our economy, when the real figures we should be focusing on are stagnant wages, persistent poverty and the failure to promote low-carbon capital investment.”