Scottish economy grows but GDP stalled by construction sector

Though the figures showed the economy remained resilient, despite Brexit, growth was still lower than the rest of the UK, which grew at 0.4 per cent.

The growth was driven by a 1.2 per cent increase in production industries output, while agriculture, forestry and fishing rose by 0.7 per cent and services output by 0.2 per cent.

But difficulties in the construction sector dragged Scottish GDP down, as the industry figure fell for the seventh quarter in a row with a drop of 2.9 per cent.

Economy Secretary Keith Brown was pragmatic: “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 per cent overall. Within this, it’s particularly heartening to see services continue to expand, and production up by 1.2 per cent, 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.”

David Mundell took to Twitter to attack the Scottish Government: “The latest #ScotGDP 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.

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

“The recent @scotgov decision to make Scotland the highest taxed part of the UK risks damaging, rather than growing, our economy.”

Professor Graeme Roy from the Fraser of Allander economic research institute said the figures were worrying.

“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 seventh consecutive quarter.

“The fall in construction activity of 7.5 per cent 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.”

For the Scottish Retail Consortium, the growth of 0.7 per cent in the retail and wholesale sector during the third quarter was good news.

Director David Lonsdale said: “These welcome figures come at a time when retailers continue to grapple with changing shopping habits and rising cost pressures, and with predictions of choppier times ahead for consumer spending as inflation continues to outstrip wage growth.

“However, the lack of significant growth in the wider economy is a source of concern for retailers looking to grow their sales.”

Scottish Greens co-convernor Patrick Harvie was less worried: “GDP gives a very limited insight into our economy, when the real figures we should be focusing on are stagnant wages, persistent poverty and the failure to promote low-carbon capital investment.”

“More equal societies have successful economies, “ he added.

Tracy Black, CBI Scotland Director, called for “a relentless focus on maintaining Scotland’s competitiveness” and “boosting its productivity”, adding “partnership between business and all levels of government has never been more important if we’re to build a resilient and prosperous economy”.