Scottish economic growth outstrips that of UK in 2018

GDP per person in Scotland also grew by 0.1 per cent during the first quarter, compared to an fall of 0.1 per cent in the UK as a whole.

The period coincided with the “Beast from the East”, when a number of sectors of the economy were affected by the extreme winter weather.

In the year to March, Scottish GDP grew by 0.8 per cent, while the UK’s grew 1.2 per cent.

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The Scottish Government hailed the figures, which mark a fifth consecutive quarter of GDP growth, as a sign of a strong economy.

However business leaders said the numbers were still fragile, and pointed out the Scottish construction sector has now shrunk for nine quarters in a row.

The Scottish services sector grew 0.4 per cent in the first quarter of 2018, while manufacturing grew by 0.9 per cent,

Finance Secretary Derek Mackay said: “Scotland’s economy is strong, with output per head the highest in the UK outside London and the south-east.

“Our prospects for longer-term growth are threatened by Brexit and the prospect of being taken out of a market around eight times bigger than the UK’s market alone. That is what poses the most serious risk to jobs, investment, prosperity and living standards.”

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Secretary of State for Scotland David Mundell welcomed the figures, but said the longer term picture was less impressive.

“It is good to see that Scotland’s economy is growing - especially in the manufacturing sector - however, over the year, Scotland's economy has lagged behind the UK's,” he said.

“The UK Government is investing to boost economic growth through its ambitious modern industrial strategy, and direct investment into Scotland’s cities and regions through growth and city deals.

"The Scottish Government needs to work with us and use its extensive powers to make sure that it is supporting productivity and growth in Scotland.”

Labour MSP Jackie Baillie said: "These are deeply troubling figures that show economic growth once again shuddering to a halt under the SNP.

"GDP growth in Scotland has now plummeted from 0.8 per cent in the last quarter to just 0.2 per cent at the beginning of 2018. 

“It is increasingly clear that former SNP economy minister Keith Brown was in denial about his mismanagement of our economy – and was content to try and blame Westminster for Scotland’s economic woes.

“Derek Mackay will need much more than SNP spin to tackle the mammoth task of rebuilding Scotland’s ailing economy."  

Professor Graeme Roy of the Fraser of Allander Institute said: “Headline growth in the Scottish economy of 0.2 per cent in the first three months of the year is disappointing, albeit slightly faster than the UK as a whole which registered growth of only 0.1 per cent.

“These data will include at least some effect on economic activity of the bad weather in February. We would expect to see some ‘bounce back’ in the next set of figures.

“The continuing downturn in the construction sector - where activity is down 9.2 per cent over the past year - is having a big impact on headline growth. Taking out the effect of the construction sector, the rest of the economy grew at a much healthier 0.5 per cent over the first three months of 2018.

“These figures are consistent with our view that growth will pick up this year, but remain below trend.”

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Economist John McLaren of Scottish Trends said: “Scotland’s GDP growth performance was predictably poor in the first quarter of 2018, given the well sign posted slump in the Construction output.

"However, the underlying position has improved somewhat, with Manufacturing and Private Sector Services combined showing growth of over 2% on a year ago.

"The new Cabinet Secretary for the Economy, Derek Mackay, faces the same difficult task as his predecessor in trying to bolster Scottish economic growth or at least in trying to better understand the sources of its current weakness.

"He did not get off to a good start by claiming that “Scotland’s economy is strong, with output per head the highest in the UK outside London and the south-east.

"In fact, Scotland’s economy remains weak and output per head is unchanged on 3 years ago.”

Scottish Chambers of Commerce director Liz Cameron said: “It is positive to see that Scotland’s GDP edged above the UK as a whole in the first quarter of 2018, leading to the fifth consecutive quarter of growth for the Scottish economy.

“However, these statistics continue to highlight key issues in Scotland’s economy, particularly in the construction sector which has now contracted for nine successive quarters.

"The fall in Q1 was particularly pronounced for the sector, with the ‘Beast from the East’ impacting activity.

“We expect the refreshed Scottish Cabinet and Ministerial team to bring a renewed vigour to Scotland’s approach to the economic challenges that we face. Combined portfolios linking Transport, Infrastructure and Connectivity should, in theory, provide a more holistic economic approach. A key priority should be the accelerated regeneration and renewal of Scotland’s infrastructure, which should act to bolster our domestic construction sector.”

Stuart Mackinnon of the Federation of Small Business in Scotland added: “With new figures out today showing growing business confidence, it is up to policymakers to nurture this newfound optimism to get the economy moving.

“That means securing a Brexit deal that works for small firms and tackling domestic problems like late payment and poor digital infrastructure.”

Scottish LibDem economy spokesperson councillor Carolyn Caddick said the GDP numbers showed the Scottish and UK economies "shuddering to a halt".

She said: "The catastrophic news from Airbus and others about what the cost of Brexit means for high-wage and high-skill jobs shows things are going to get worse unless there is a change of direction.

"People should be on the streets in protest. People deserve a vote on the final Brexit deal to give them a chance to stop the economic damage."