Finance and construction boosting Scotland's economy

The construction and financial services sectors are boosting Scotland's economy, figures published today revealed.

Derek Mackay hailed the figures. Picture: PA
Derek Mackay hailed the figures. Picture: PA

The Office of National Statistics found the Scottish economy grew by 0.3% in the period from October to December last year - a rise of 1.3% compared to the same time in 2017 - and slightly above the growth of the rest of the UK of 0.2 per cent.

Output in financial services grew by 0.5% while the construction sector saw growth of 0.8%. However the production sector shrank by -0.9% due to the reactors at the Hunterston B power station being offline.

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It was the eight consecutive quarter rise for the Scottish economy, and overall GDP grew by 1.4% last year - the same as the UK as a whole.

The economic news comes a day after it was revealed that Scottish employment rates were at a near record high at 75.3 per cent, while unemployment had fallen to 3.4 per cent, slightly below the UK rate of 3.9 per cent.

Reacting to the figures. Economy Secretary Derek Mackay said “Scotland’s economy continues to go from strength to strength."

He added: “Growing our economy and supporting businesses and jobs is a top priority for the Scottish Government. We have provided more than £5 billion of capital investment to grow 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."

However, economist John McLaren, of the think tank Fiscal Affairs Scotland sounded a more subdued note. In his analysis he says that the Scottish economy "seriously under performed" in the years 2015 and 2016 but since then has returned to growth on a par with that of the UK as a whole, although it is still below the historical average."

He added that while Scotland’s GDP growth performance in 2018 was "stronger than had been predicted and similar to that of the UK" it was still "overall, disappointingly low."

"The future still looks less than bright however, not just due to potential Brexit impacts but also a concerns over a lack of dynamism in Scottish Private Sector Services performance.”

Mr Mackay, however, stressed that it was Brexit which could have a damaging effect on Scotland's economy in the future.

"The UK’s EU exit remains the biggest threat to our economic stability. All forms of exit will cost jobs, make people poorer, damage our society and undermine the democratic decision of the people of Scotland to remain in the EU," he said.

“The Scottish Government is firmly opposed to the UK’s EU exit and we continue to hope that it can be avoided, but with every passing day, the UK Government is getting closer to taking our economy off the cliff."

He said the Scottish Government's priority was to remain in the EU, but "short of that, the least damaging option is to remain in the Customs Union and European Single Market of 500 million people - eight times larger than the UK market alone.”

Scottish Secretary David Mundell also welcomed the GDP figures which he said: "show Scotland’s economy continuing to grow."

He added: “The news follows positive employment statistics earlier this week and it shows UK Government support included in the Budget and the Spring Statement – and our £1.35 billion investment in city and growth deals – is having a big impact.

“However, I’m concerned the Scottish economy has not shown the same growth as the UK as a whole over the past few years and it is important to close the gap.

“The Scotland Act 2016 gives the Scottish Government a range of new powers and I want to see them used effectively to boost productivity and strengthen the economy. By making Scotland the highest taxed part of the UK they risk damaging, rather than growing, our economy."

Today's results are based on Scotland's onshore economy, and do not include the output of offshore oil and gas extraction.