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Gap persists with UK average

Scottish economy grows for fourth quarter

Jamie Hepburn

Jamie Hepburn: ‘We are determined to do more’

The Scottish economy grew by 0.3% during the fourth quarter of 2017, according to statistics announced today by Scotland’s Chief Statistician.

This is the fourth consecutive quarter of positive growth in Scotland and compared to the same quarter in 2016, the Scottish economy has grown by 1.1%.

Taken over the year, annual GDP has also increased by 0.8% in 2017, improving on Scotland’s economic performance in 2016 where GDP grew by 0.2%.

During the fourth quarter of 2017 output in the Services sector grew by 0.5%, output in Production grew by 0.9% and output in the Construction sector fell by 2.6%.

In 2017 as a whole, annual GDP increased by 0.8% compared to 2016.

Scotland’s GDP per person, which is adjusted to account for changes in the size of the population, increased by 0.2% during the fourth quarter of 2017.

In the latest quarter, growth was driven by a number of sectors, with the largest contributions from Business Services and Finance, Distribution, Hotels & Catering, Manufacturing, and Electricity & Gas Supply.  Overall the Services sector grew by 0.5%, and the Production sector grew by 0.9%.  Whilst Construction sector output fell by 2.6% it remains around 15% higher than at the beginning of 2014.

Minister for Employability and Training Jamie Hepburn said: “Scotland’s economy continues to show strength. 

“These figures are welcome, but we are determined to do more to grow our economy and protect Scotland from the headwinds of Brexit.

“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.”

Stuart McIntyre of the Fraser of Allander Institute said: “Growth in much of the Scottish economy was actually slightly better than the headline figure suggests. 

“Growth in the services sector, which comprises over three quarters of the economy, was a more robust +0.5% in the final three months of 2017. Indeed, the services sector has outperformed the overall Scottish economy over the past year, growing by +1.4% compared to the same period the year before. 

“It is a large drop in the activity of the construction sector, down -2.6% on a quarterly basis, which is largely responsible for dragging headline growth down. This continues a trend of weakness in the construction sector in recent times. Activity in the construction sector is now down -6.5% relative to the same period in 2016. 

“While weak headline growth in the Scottish economy remains a significant concern, as does the decline in activity in the construction sector, other sectors have grown strongly since last year including accommodation and food services (+3.5%); refined petroleum, chemicals & pharmaceuticals (+7.1%), and the electricity & gas sector (+9.5%).”

Andy Willox, FSB’s Scottish policy convener, said: “Given the impact of both the Carillion collapse and poor weather, this growth rate will have been sorely tested in the first three months of this year.  

“If we want to move the Scottish economy up a gear, we need both the UK and Scottish Governments to put growth at the heart of their priorities. For a start, they could examine whether their colossal procurement budgets are delivering for local smaller firms.”

Liz Cameron, chief executive and director at Scottish Chambers of Commerce said: “Positive changes to the business environment will act as an important enabler to enhance growth for the rest of the year, such as the continuing reform of the business rates system in Scotland, the first wave of which came into effect this April.”

David Mundell

David Mundell: ‘a significant gap persists with the rest of the UK’ (photo by Terry Murden)

Scottish Secretary David Mundell said: “It is good news that today’s GDP figures show that Scotland’s economy continues to grow. 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.”

Scottish Labour’s economy spokesperson Jackie Baillie, said:Any amount of growth, however small, is of course welcome. But 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.”

Economy spokesperson for the Scottish Liberal Democrats 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.

“Investment in people through education and mental health will be the route to raise long-term productivity and growth.

“Giving Scottish business the chance to flourish by trade with the EU and the rest of the UK in a single market is essential.”

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