IT has been a most inauspicious week for doomsayers on the Scottish economy.
Sadly these days, some politicians and commentators appear at pains to talk down the economy north of the Border. Frequently, their comments seem motivated by the fact the performance of the Scottish economy is being viewed through the prism of the independence question.
So views can become entrenched, regardless of what the economic indicators are signalling.
Given this febrile backdrop, it is crucial to look at the source material on the economy, whether it be official data or surveys, and this week’s releases seem unlikely to have made happy reading for the doomsayers.
It is also vital to examine the source material when it comes to analysing the performance of the economy in the UK as a whole. We have, especially since the Brexit vote in 2016, had much tub-thumping and utterly surreal interpretations of UK economic indicators from some who campaigned for a Leave vote. Some Brexiters would have you believe the UK is booming, even though official data and business surveys indicate it is most certainly not.
UK growth, which has been dismal in any case since 2010 as the Conservatives’ austerity programme has choked the economy, has slowed much further since the Brexit vote.
Not only that, but the independent forecasters believe UK growth will remain weak for the foreseeable future, even if there is a sensible agreement with the European Union on the UK’s future relationship with the bloc. Obviously, if there is a cliff-edge, no-deal Brexit, we would be looking at something far worse still in terms of consequences for the UK.
Returning to the Scottish situation, the economy north of the Border has not had its troubles to seek recently.
The crude-price plunge, which began in the second half of 2014, triggered a global oil and gas sector downturn and hammered the North Sea. Oil and gas companies announced many thousands of job losses in the North Sea, and the downturn hit the supply chain hard.
The North Sea’s woes weighed on the broader north-east economy, as the hospitality sector and other companies reliant on the spending of oil sector workers were laid low. The effects also spilled over to the wider Scottish economy. Thankfully, oil prices have recovered partially and there are signs of better times in the North Sea, after a protracted downturn.
All the while, the Scottish economy, like that of the UK as a whole, has continued to be dragged down miserably by the Tory austerity programme which, whatever the political spinners might tell you, is as savage as ever.
Against this backdrop, it is important to recognise the brighter Scottish economic picture painted this week represents a comeback rather than a boom (of the type Brexiters would have you believe the UK is enjoying).
Revised official data from the Scottish Government on Wednesday show economic growth north of the Border was twice the rate of that in the UK as a whole in the first quarter.
The Scottish economy grew by 0.4 per cent in the opening three months of this year, according to the quarterly national accounts. This is double the 0.2% first-quarter growth in Scottish gross domestic product estimated in June, when initial figures were published. The UK grew by 0.2% in the first quarter.
Scottish manufacturing output jumped by 2% quarter-on-quarter in the first three months of 2018, the quarterly national accounts show. UK manufacturing output fell 0.1% in the first quarter. Services sector output north of the Border rose by 0.4% in the first quarter, ahead of a 0.3% increase in the UK as a whole.
Meanwhile, Scottish manufactured export volumes rose by 3.6% quarter-on-quarter in the opening three months of 2018. Comparing the year to March with the previous 12 months, manufactured export volumes grew by 8.7%.
What is more, comparing the year to March with the preceding 12 months, Scotland’s growth rate was revised up from 0.8% to 1.3%.
Liz Cameron, chief executive of Scottish Chambers of Commerce, hailed the figures as “great news for Scotland”, while expressing concerns over a continued fall in construction output in the first quarter.
On Monday, Royal Bank of Scotland’s latest PMI (Purchasing Managers’ Index) report showed private sector economic growth north of the Border was stronger than that UK-wide last month for the first time since the immediate Brexit vote aftermath in July 2016, and was the fastest in four years.
Royal Bank chief economist Sebastian Burnside noted, before the single month in the immediate wake of the Brexit vote in which Scottish growth was faster than that UK-wide, the previous time the PMI survey had shown relatively stronger expansion north of the Border had been in 2013.
The survey signalled particular strength in Scotland’s information technology, and professional and business services sectors. It also flagged major success for Scottish companies in winning new contracts.
Mr Burnside declared: “I think oil will definitely be helping.”
Given the struggles of Scotland’s economy, the better news is reason for some celebration. However, it says much about the terrible scale of the austerity squeeze and the Brexit drag that what is essentially weak growth by historical standards provides (perfectly valid) reason for cheer.
Of course, while there may be signs of brighter times for the Scottish economy so far this year, the shadow of Brexit is long and dark. Although the rate of job creation in the private sector economy in Scotland in July was faster than that in the UK as a whole, it eased from the pace set in June, the PMI survey showed.
Mr Burnside said: “In the last couple of months, there has been a lot of focus on prospects for a no-deal Brexit in particular. I wonder if that is starting to creep in there.”
The Brexit bad news just keeps on coming, and is stated matter-of-factly by an embattled UK Government.
Foreign Secretary Jeremy Hunt said in Helsinki this week: “Everyone needs to prepare for the possibility of a chaotic no-deal Brexit.”
So, while the Scottish economy thankfully seems to have been a lot stronger this year than doomsayers might have liked, we must not underestimate the capacity of this Conservative Government and their Brexit farce to throw things badly off course again.
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