Scottish economy grows for three solid years but is slowing down

The data from the Office of National Statistics, shows that the Scottish economy has grown for twelve consecutive quarters and output is now 3.0 per cent above its pre-recession peak.

Total output in the economy grew 0.1 per cent for the period April to June 2015 and 1.9 per cent compared to the same quarter last year.

However, this was down on the 0.6 per cent growth recorded during the first three months of 2015 and compared unfavourably with the UK economy as a whole which expanded by 0.7 per cent in the second quarter.

Scottish Chambers of Commerce chief executive Liz Cameron focused on the apparent slowdown in economic growth.

She said: “An apparent contraction in the production sector has reduced Scotland’s growth rate to its lowest level for three years.

“This is very concerning, particularly when measured against the healthy UK growth rate of 0.7 per cent over the same period.

“This should act as a wake-up call to prove that we simply cannot take the growth of our businesses and our economy for granted and that government policy, both at a UK and Scottish level, must be absolutely focused on creating an environment in which businesses can thrive.”

Over the second quarter, the construction sector grew by 3.5 per cent, the ONS said, driven by public infrastructure as well as repair and maintenance.

Electricity and gas supply sector also saw healthy growth of 2.4 per cent reflecting increased capacity alongside favourable generation conditions over the period.

Meanwhile, the construction sector grew by 3.5 per cent. But output in services was flat while production contracted by 0.8 per cent, according to the data.

However, Deputy First Minister John Swinney said: “Today’s statistics show continued growth in Scotland’s economy, with three years of uninterrupted expansion even against a backdrop of economic challenges and headwinds.

“It is positive to see further growth in the construction sector as a result of continuing strong investment and support from public spending in Scotland. Likewise the healthy expansion in Q2 of the electricity and gas supply sector is a positive story for Scotland’s economy.

“Nonetheless, the figures point to challenges in some sectors as a result of several factors, including subdued demand in the oil and gas sector and a normalising of some very strong trends in recent periods.

“The annual growth rate moderated a little compared to the very strong growth seen in recent periods but remains healthy by historical standards. The Scottish economy has now seen three years of continuous expansion and has shown considerable resilience in the face of a number of external and domestic challenges. The solid performance in the construction sector highlights the success of the Scottish Government’s approach of investing in Scotland’s infrastructure. Projects like the Queensferry Crossing create public assets that will benefit long term growth as well as helping to support the economy as it continues to recover.

“There will be no let-up in the Scottish Government’s commitment to securing economic growth and promoting Scotland as the best place to do business.”

Andy Willox, Scottish policy convenor for the Federation of Small Businesses’ (FSB), said: “Recent evidence from our members revealed a significant dip in small business confidence. Today’s growth figures show that there’s obviously still work to do to get Scotland’s economy firing on all cylinders at a national and local level.

“We need to see Scotland’s decision-makers focus on practical measures to ensure this economic sniffle doesn’t become something more sinister. We need to make Scotland’s local economies less vulnerable to global economic shocks, and in our view, that means developing our small businesses to make local communities more resilient.”