Scottish economy registered modest growth prior to EU vote

Latest official figures published today have shown the Scottish economy grew by 0.4 per cent in the second quarter of 2016.

According to Gross Domestic Product statistics announced today, during the second quarter of 2016, services in Scotland grew by 0.5 per cent, production grew by 0.3 per cent, and construction contracted by 1.9 per cent.

Compared to the same period last year the Scottish economy grew by 0.7 per cent.

Cabinet Secretary for the Economy, Jobs and Fair Work Keith Brown said: “It is encouraging to see modest growth since the start of the year, which is the highest rate of quarterly growth since the start of 2015.

“These figures show that prior to the vote to leave the EU Scotland’s economy was growing.

“Despite concerns surrounding the EU referendum, the fundamentals of Scotland’s economy are strong and recent successes, such as Scotland securing more foreign development investment projects in 2015 than any other part of the UK outside London, are to be welcomed.

“The Bank of Scotland’s latest PMI showed Scotland’s private sector output expanding in September and our labour market now showed record quarterly growth employment over May-July 2016, and the unemployment rate is now below that of the UK.

“But in the months surrounding the EU referendum, there is no doubt that businesses faced challenging circumstances and damaging uncertainty. These are global issues and Scotland is not immune. We have constantly made clear our concerns that the vote will have a negative impact on investment and our economy. That is why protecting Scotland’s relationship with the EU, and continued membership of the single market is crucial – so we can build on some of these positive economic trends, rather than have this progress placed under serious threat.

“We are also acting now to support business. That is why we are establishing a £500 million Scottish Growth Fund, which will help companies access capital through guarantees and loans. And we are injecting some £100 million through a capital stimulus package to keep our economy moving and protect jobs. We are yet to see that action matched by the UK Government, and I urge them again to come forward with their own capital stimulus package as a matter of urgency.”

Also reacting to the latest stats, Liz Cameron, chief executive of Scottish Chambers of Commerce, said: “It is good news that Scotland’s economic growth rate increased in the second quarter of this year but there is still a great deal of work to be done. To put this in perspective, the Scottish economy has grown in a year at almost the same rate that the UK economy has grown in just three months.

“These figures underline the fact that Scotland’s economic performance has been significantly lower than that of the UK as a whole for a full year and, whilst we are now seeing welcome growth in our production and service sectors, construction has been contracting at a significant rate for two consecutive quarters.

“Against this background, we would question Scottish Government policies such as the scaling down of business rates reliefs on empty properties, which are discouraging speculative development and reducing the opportunities available for construction businesses. This policy must be revisited and both the Scottish and UK Governments must continue to prioritise investment in our infrastructure to deliver an immediate boost to construction and a long term boost to our economy.”

Colin Borland, the FSB’s head of external affairs in Scotland, said: “These pre-referendum statistics might feel like a history lesson, but they teach us that Scottish growth was weak even before June’s historic vote.

“Scotland needs to strive for growth levels at least as good as the UK average. We look forward to the SNP talking business when they meet in Glasgow this week.

“In addition, the UK government needs to put the welfare of the economy at the top of its priority list as it formulates its approach to leaving the EU. The litmus test for every Brexit policy must be the impact on our high streets, small businesses and local communities.”