Brown says foundations are strong
Economy recovering from oil slump, says report
Scotland’s economy is recovering from the oil slump and growth is in line with the rest of the UK, excluding London, according to government figures.
The labour market remains resilient and Scotland continues to be the most attractive location outside London for foreign investment.
The trends are revealed in the latest State of the Economy report from the chief statistician Gary Gillespie who also warns that growth will remain slow.
“Brexit continues to present a significant risk to business and consumer sentiment in Scotland with investment sensitive to changing market signals. It also presents the greatest source of uncertainty for the outlook particularly beyond 2018,” he says.
The report shows:
- Independent economic growth forecasts remain positive, projecting growth of around 1% in 2017 and 2018
- The oil and gas sector has continued to weigh on growth in 2016, though there are emerging signs of confidence returning to the sector
- Scotland’s labour market has remained resilient with unemployment below the UK figure and falling over the past year
- Scotland continues to be the most attractive part of the UK, outside London, for foreign direct investment (FDI) and has been for the past five years
- Business sentiment has improved, particularly in the manufacturing sector, though Brexit continues to create substantial uncertainty
- In the five years since 2010, Scotland’s GDP growth is in line with the UK average and Scotland’s GDP per head growth is above the UK average, when London is excluded.
Economy Secretary Keith Brown said: “This report confirms that the foundations of Scotland’s economy remain strong.
“2016 was a record breaking year for foreign direct investment into Scotland. According to EY, for the second year in a row we have attracted more projects than ever before and Scotland has been the top UK region outside London in every one of the past five years.
New analysis in the report reveals that in the five years since 2010, Scotland’s GDP growth is in line with the UK average and Scotland’s GDP per head growth is above the UK average, when London is excluded.
“This reflects the fact that London’s economy, with its concentration of corporate and financial activity, is distinct from all other parts of the UK and has a significant impact on UK performance indicators,” said Mr Brown.
“That said, growth is slower than we would like to see and the UK Government’s stance on Brexit continues to present a huge threat to jobs and prosperity in Scotland.
“We will continue to do all we can to support growth.”
Highest growth in retail sales
> Scottish retail sales in May increased by 0.8% on a like-for-like basis compared to May 2016, when they had decreased by 0.6%.
Excluding the distorted rate from April, this is the highest growth since December. On a three-month basis, like-for-like sales grew by 0.8 per cent, the fastest rate of 2017 so far.
David Lonsdale, director the Scottish Retail Consortium, said: “Retail sales in Scotland nudged up a touch last month, once falling prices at shop tills were factored in.
“Unsurprisingly, there was a marked deceleration from the octane-fuelled performance witnessed during April; which was driven by Easter sales.
“Whether this owes more to shoppers catching their breath, or reflects a more prolonged period of cooler retail sales amid growing uncertainty over the outlook for household disposable incomes, remains to be seen.
“”Grocery sales did well again, with the category recording its fastest growth in almost four years. However, that growth is partly being driven by rising food price inflation, so grocers will see only modest benefit. Non-food retail sales remained in the doldrums.
“There was a greater focus across most non-food categories on value and affordability, with a corresponding dip in sales of larger or bespoke household items. Sales of mobile phones did well as did summer-related women’s footwear and sandals.
“For Scotland’s retailers, all eyes over the coming months will be on the direction of consumer spending, with family finances set to be buffeted further by overall inflation outstripping the growth in wages, and as recent domestic cost increases such as council tax take hold.”