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New data warning for government

Scotland ‘teetering on brink of recession’

Wireline industryScotland’s economy is under-performing the UK and teetering on the brink of recession, according to new data.

The Fraser of Allander Institute says the economy shrank in the final three months of 2016 and is warning that it remains in a precarious position.

Another quarter of falling output would put Scotland in recession while the rest of the UK grows.

FoAI’s forecast is for growth of 1.2% for 2017, 1.4% in 2018, and 1.6% in 2019. All of these are behind UK indicators.

Graeme Roy, director, said: “The ­Scottish economy continues to lag behind the UK as a whole, with the scale of the gap growing rather than narrowing. On balance, our forecast is that growth will return in 2017, with tentative signs of a more positive outlook for Scotland’s oil and gas sector and improving order books across Scottish businesses.

“In the current climate, sentiment can change quickly. Should the upcoming Brexit negotiations go badly, or the UK economy slows down more quickly than anticipated, then Scotland’s economic prospects could take a sharp turn for the worse.” He added: “Coming on the back of little growth in real earnings since the financial crisis, for many households it will feel like a ‘lost decade’.”

Scottish Conservative shadow economy secretary Dean Lockhart said: “Scotland’s economy continues to badly under-perform thanks to this SNP government. As this report states, whether or not Scotland officially enters recession hangs in the balance.

“And that’s while the rest of the UK powers ahead, so the SNP can’t possibly blame Brexit.”

Labour’s economy spokesperson Jackie Baillie said: “Scotland is teetering on the brink of recession because Nicola Sturgeon has been more interested in running a campaign for a second independence referendum than running a government.

“Every time difficult figures for our economy are announced SNP ministers claim the fundamentals of our economy are strong. Ministers must take their heads out of the sand and stop being complacent.

“With the new powers of the Scottish Parliament and the budget for public services more dependent on Scottish tax revenues than previously, we need a government with a laser focus on growing the economy and creating jobs.”

The SNP preferred to relate Scotland’s under performance to the Brexit talks and said a bad Brexit deal could see Scotland’s economic prospects “take a sharp turn for the worse”.

It said the FoAI’s data underlined the importance of securing single market membership. 

Stewart Stevenson, for the SNP, said: “This is just the latest warning that a bad Brexit deal could have devastating consequences for our economy – which is exactly why the Scottish Government will be fighting tooth and nail to protect our single market membership.

“The Tories put their plan for a hard Brexit to the public and lost their majority.

“It would be a grave mistake for Theresa May to push on with her disastrous plans to leave the single market – and it could cost tens of thousands of jobs in Scotland.

“It’s time for the UK government to adopt a cross-party, four-nation approach to negotiations – and to protect our single market membership as we leave the EU.”

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