Scottish economy growth 'threatened by UK Government's Brexit obsession'

Scotland's economic stability is threatened by the UK Government's "Brexit obsession" Derek Mackay warned today, as new figures showed the Scottish economy grew for the ninth consecutive quarter.

Data covering January to March this year found the economy north of the Border grew by 0.5 per cent in real terms compared to the previous quarter, and is now up 1.4 per cent year-on-year.

During the first quarter of 2019 output in the construction sector grew by two per cent, but the services sector grew by just 0.1 per cent.

Two sub-sectors of manufacturing - food and drink and industries associated with pharmaceuticals - account for more than half of the 0.5 per cent growth of the last quarter.

Derek Mackay, left, warned that recent growth in the Scottish economy could be undone by Brexit

Holyrood economy secretary Derek Mackay claimed that growth could soon be put into reverse if the UK crashed out of the European Union later this year with no deal.

But John McLaren, an economist with Scottish Trends, said: “Scottish growth in quarter one of 2019 was above the recent average, helped by what are likely to be one-off boosts in spirits and pharmaceuticals production.

“But the idea that Scotland’s economy continues to go from strength to strength is absurd, as the recent £1 billion blow to the Scottish Budget through relatively slower Scottish growth demonstrates.”

Mr Mackay said: “Growing the economy is a priority for the Scottish Government and we can see from these results it is working. We have provided more than £5 billion of capital investment to build and modernise Scotland’s infrastructure, and a wider package of support to businesses including maintaining a competitive business rates package and providing the most generous package of non-domestic rates reliefs anywhere in the UK.

“The months and years ahead are crucial as we continue to invest in and grow the economy. However, the UK Government’s EU exit plans, in whatever form, will damage the Scottish economy.

“The Scottish Government has consistently been clear that the best option for the future wellbeing and prosperity of Scotland is to stay in the European Union. Otherwise we will see damage to our economy and the future prospects of the people of Scotland suffering.

“The growth and economic stability currently being experienced in Scotland is seriously threatened by the UK Government’s Brexit obsession. Indeed a no deal Brexit is set to take us from growth to recession.”

Scottish secretary David Mundell said: “Scotland’s economy is continuing to grow but I’m concerned that we have not matched the UK growth rate over the past 12 months. We need to close the gap.

“The UK Government is investing in Scotland’s economy, for example with our £1.3 billion city and growth deal programme.

“I’d urge the Scottish Government to work with us and to use the powers at their disposal to best effect. It is increasingly clear their threats of a second independence referendum and decision to make Scotland the most highly taxed part of the UK are holding our economy back.”

Meanwhile, UK inflation cooled off in May as price rises for travellers slowed down during the lull after the Easter rush, new figures showed.

The Office for National Statistics (ONS) shows the Consumer Prices Index (CPI) fell to two per cent in May, down from 2.1 per cent in April.

The rate was in line with economist expectations and was also dead on the Bank of England's two per cent inflation target.