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Brown 'heartened' by data

Scottish economy grows 0.2% in third quarter

Keith Brown

Keith Brown: ‘encouraging figures’ (photo by Terry Murden)

Scotland’s economy remained resilient going into the second half of 2017 despite a challenging environment and continued Brexit uncertainty, the Economy Secretary has said.

According to the latest GDP statistics published by the Scottish Government today, the Scottish economy grew by 0.2% in the third quarter of 2017, and by a total of 0.8% over the year.

In the latest quarter, services grew by 0.2% and production grew by 1.2% after a return to growth for both manufacturing, mining and quarrying.

Economy Secretary Keith Brown said: “Despite the impact that continued Brexit uncertainty is having on our economy, today’s figures demonstrate the resilience of the Scottish Economy with the third consecutive quarter of positive growth.

“Although more modest than we would like, it is encouraging to see the economy grow by 0.2% overall.

“Within this, it’s particularly heartening to see services continue to expand, and production up by 1.2%, with a return to growth for manufacturing. 

“While these figures show a fall in construction output, this is as a result of activity returning to more normal levels following our increased investment in large transport infrastructure developments over recent years, including the Forth Replacement Crossing, M8 missing link and the Borders Railway.

“Our determination to seize opportunity and grow our economy is demonstrated by the £270 million increase on economic spending we announced in the 2018/19 Draft Budget.

“However it cannot be stressed enough that the single biggest threat to our economy as a whole remains the lack of clarity from the UK Government over Brexit.


“This week the Scottish Government published analysis which showed that failure to remain in the single market or secure a free trade agreement would see Scotland’s GDP around £12.7 billion lower by 2030 than it would be under continued EU membership.

“”I would once again call on the UK Government to give people and businesses greater certainty over the Brexit process in order to further stimulate growth in Scotland’s business communities and allow us to continue to attract and retain talent within our workforce.”

Professor Graeme Roy, director of the Fraser of Allander Institute, said the figures reflected the “fragile” nature of the economy.

“As expected growth remains fragile and below trend. The figure for Scotland is also below UK growth for the same period of 0.4%,” he said.

“Annual growth in the Scottish economy of a mere 0.6% over the year to Q3 2017 is disappointing. Prior to the financial crisis, average yearly growth had typically been greater than 2%.

“The figures once again highlight divergence in performance across industries in Scotland. Whilst services and production grew – the latter driven by strong growth in electricity production – construction output fell for the 7th consecutive quarter.

“The fall in construction activity of 7.5% over the year has acted as a major drag on the Scottish GDP numbers, suggesting that the weak GDP numbers cannot just be explained by what has happened to the oil and gas sector.

“The government have pointed out that a significant proportion of the decline in construction appears to be a number of major public infrastructure projects coming to an end. But with the government’s overall capital budget rising, other factors must also be having an impact.”

Scottish Secretary David Mundell urged the Holyrood government to use extra funding provided in the UK Budget and said its tax policies were holding back growth.

“These latest GDP figures show the Scottish economy growing, but much more slowly than we would like, and continuing to lag behind that of the rest of the UK,” he said.

“The UK Government is investing – including with an extra £2 billion announced in the Budget – to increase prosperity in Scotland, and I urge the Scottish Government to use its extensive new powers to do the same.

“But its recent decision to make Scotland the highest taxed part of the UK risks damaging, rather than growing, our economy. 

“With Scotland’s exports to the rest of the UK worth four times more than those to the EU, today’s GDP figures are a stark reminder that we need to protect the vital UK internal market.

“The UK Government is fully focused on making our exit from the EU work for Scotland and the rest of the UK, and we urge the Scottish Government to work constructively with us.”

Scottish Labour’s economy spokesman Jackie Baillie said:Any growth in the Scottish economy, however small, is of course welcome.

“But the reality is growth is still far too low – both in Scotland and across the UK. The construction sector in particular is in negative output for the seventh consecutive quarter.

“SNP ministers patting themselves on the back and blaming Brexit for all the difficulties in the Scottish economy simply is not good enough.”

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