The National's economic experts have their say on yesterday's GDP figures ...



Yesterday’s GDP figures were far better than most economists were predicting and demonstrate the dangers of think tanks and opposition politicians making snapshot judgements on figures from one quarter and assuming its a trend.

The Scottish Government claims the reopening of the Dalzell steel plant after its intervention was partly responsible for better manufacturing and steel production figures and there is some truth in that. However, the Scottish Government lacks the powers to create bespoke economic policies for Scotland and the biggest economic danger will come from Brexit, and the ending of EU CAP payments that will make as many as 76 per cent of Scottish farms unprofitable and create a rural business recession.

The figures show the Scottish economy has been remarkably resilient in the face of the fall in oil prices and demand in that sector, the overall slowing of the rUK economy and Westminster forced austerity, the ending of many of the Scottish Government’s capital expenditure projects and Brexit uncertainty. The falling pound has helped boost manufacturing exports from Scotland more than in the rest of the UK as food and drink, whisky etc. are fully manufactured here and so the exchange rate favours exports. Many rUK manufactured goods, e.g.: Nissan cars have 60 per cent imported parts meaning that the exchange rate benefit is wiped out by inflation on imported components.

The UK economy is in real trouble, interest rate rises look set to coincide with higher inflation and record unsecured debt levels which may combine with a late 2017/early to mid 2018 London and south east housing market crash and so Scotland may be dragged into a recession by virtue of our connection to the failing — and Brexiting UK.



Quarterly growth numbers are notoriously unreliable. So when it was reported that the final quarter numbers for Scotland in 2016 showed an actual (if modest) downturn, I didn’t lose much sleep. However, that did not stop the Unionist media inventing the possibility of a full recession north of the Border, implying a second, successive quarter’s contraction.

But now we know: Q1 growth in Scotland turns out to be four times the UK factor, on the back of strong performance in the production sector (i.e. actually making real things). Ignore the Unionist media talking down Scottish business. True, recent growth has slowed as a result of the fall in global oil prices, but the rest of the economy has performed extraordinary given this handicap.

Meanwhile, the impact of Brexit uncertainties and the negative impact of inflation on consumer spending are weighing heavily on the UK economy as a whole. Now would be a good time for the Scottish Government to build on the good Q1 GDP numbers to launch a series of growth initiatives locally. Start by delivering a Scottish Investment Bank that lends into the productive economy to stimulate investment.



It would be imprudent for any politician to sneer at such positive figures, but I don’t doubt that someone, somewhere, will try to turn them into a negative.

The reality is that SMEs and micro-businesses care more about what’s being done to support them to thrive, rather than just survive, particularly in such worrying pre-Brexit times. Confidence is slowly growing amongst our SMEs, but more needs to be done if they are to successfully chart the choppy Brexit waters.

SMEs are the backbone of our economy, so we need to listen to what they want and do what we can to meet those needs. Issues such as much-needed legislation on late payment, a Small Business Commissioner to champion them and encourage additional national and local government support, a Minister for SME Growth, guaranteeing rights for EU nationals, a robust set of rates relief measures that protect businesses from rapid rates rises, and therefore protects jobs and economic growth.

Actions speak louder than numbers.



It’s a great relief that Scotland has pulled itself back from the brink of recession, as the latest official figures showed yesterday. The previous quarterly fall in national output was perhaps just a blip caused by sluggish Christmas trade, piling the problems on to those already caused by Brexit and weak oil prices. The recovery in the first quarter of 2017 was actually quite strong, and this may show that the drop in sterling is helping Scottish exporters too. So for the moment the adverse pressures on us have let up a little, but the road ahead remains fraught with difficulties. The main risk remains Brexit, though this is shared with the rest of the UK. North of the Border, our manufacturing and service industries deserve a far more business-friendly attitude from the Scottish government, with less regulation and some hard thinking about new kinds of practical help for companies, especially small companies, that find themselves in an exceptionally challenging commercial environment. In the end the standard of living of all of us depends on them.