Concern over 'disappointing' economic growth

Economic growth in Scotland increased in the last three months of 2017 but continues to lag behind the UK, with one economist claiming current Scottish Government policies "seem unlikely to do much to remedy this".

John McLaren commented after the latest data showed Scotland's economy grew by 0.3% from October to December - slightly behind the 0.4% rise recorded across the UK.

Annual figures for 2017 showed GDP north of the border was 0.8% up on the previous year - less than half the 1.8% increase recorded by the UK.

Economist Mr McLaren said: "Scotland's GDP growth performance continues to disappoint. While the last two to three years have been particularly poor, slow growth has been evident ever since the end of the recession back in 2009.

"Despite initiatives like the new Scottish Investment Bank, current Scottish Government policies seem unlikely to do much to remedy this. Meanwhile the lack of understanding, or interest in, why this has happened remains of worry."

He added: "It bears repeating that if such a poor performance was being observed at the UK level, for a similarly long period of time, then far greater pressure would be being brought to bear on the UK Parliament and the Bank of England to act on, or to explain, the slowdown."

Stuart McIntyre of the Fraser of Allander Institute economic think tank said "weak headline growth in the Scottish economy remains a significant concern".

Despite this he said "growth in much of the Scottish economy was actually slightly better than the headline figure suggests".

In the last three months of 2017 the services sector - which makes up about 75% of Scotland's economy - grew by 0.5%, while output in the production sector was up by 0.9%

Construction output was estimated to have decreased by 2.6% - a drop of 6.5% compared to the same period in 2016.

Mr McIntyre said this was "largely responsible for dragging headline growth down", adding that it continued "a trend of weakness in the construction sector in recent times".

The Scottish Government said that four consecutive quarters of positive economic growth in 2017 showed "Scotland's economy continues to show strength".

Employability and Training Minister Jamie Hepburn said ministers were "determined to do more to grow our economy and protect Scotland from the headwinds of Brexit".

He said: "The Scottish Government is investing a record £2.4 billion in enterprise and skills, £4 billion in new infrastructure and £600 million in broadband, to ensure every home or business premise in Scotland has access to superfast broadband and that we can secure the benefits of the digital economy - a commitment unmatched across the UK.

"And we are preparing for the future with investments in a new National Manufacturing Institute and the establishment of the Scottish National Investment Bank.

"As we face the potential impact of Brexit to come, the Scottish Government is determined to protect Scotland's economy and ensure our potential is not derailed by damaging decisions of the UK Government."

Labour economy spokeswoman Jackie Baillie (Scottish Parliament/PA)
Labour economy spokeswoman Jackie Baillie (Scottish Parliament/PA)

Scottish Secretary David Mundell said it was "good news" that GDP in Scotland continued to grow.

The UK Government minister added: "I note a modest improvement in Scotland's important services sector, and encouraging growth in production industries.

"However, it is increasingly concerning that a significant gap persists between Scotland's economy and the rest of the UK.

"The Scottish Government has the powers to boost productivity and strengthen the economy, and must use them to close this gap. By making Scotland the highest taxed part of the UK, the Scottish Government risks damaging, rather than growing, our economy."

Labour's economy spokeswoman Jackie Baillie was also critical of SNP ministers, saying: "Yet again, these figures expose how Scotland's pitiful economic growth under the SNP is low and slow.

"Scotland's economy is still lagging far behind the rest of the UK, while the continued contraction in the construction sector is a particular concern.

"Scotland deserves better than SNP ministers content to put their fingers in their ears, do nothing and blame bad economic performance on Brexit."

The Liberal Democrats' economy spokeswoman Councillor Carolyn Caddick said: "People will be disappointed that for all their speeches SNP ministers have not been able to keep pace with the growth in the rest of the UK. UK growth itself is pretty pathetic."