Scotland records 0.3% economic growth in final quarter of 2017

April 5, 2018

Economic growth in Scotland increased in the last three months of 2017 – although new figures showed annual GDP growth was less than half that of the UK.

Scottish Government figures showed a rise of 0.3% from October to December, up from 0.2% the previous quarter.

Growth in Scotland lagged slightly behind the 0.4% rise in GDP seen across the UK in the final quarter of last year.

In Scotland annual GDP growth for 2017 was 0.8% higher than the previous 12 months, with the UK economy growing by 1.8% over the same period.

The Scottish Government restated its determination to boost the economy in the run-up to Brexit, with ministers warning the country must not be “derailed by damaging decisions of the UK Government”.

Scottish Secretary David Mundell said it was “increasingly concerning that a significant gap persists between Scotland’s economy and the rest of the UK”.

GDP in Scotland for the last three months of 2017 was 1.1% higher than it was in the same period of 2016, according to the data.

In the most recent quarter the services sector – which makes up about 75% of Scotland’s economy – grew by 0.5%, while output in the production sector was up by 0.9%

Construction output was estimated to have decreased by 2.6% during October to December – a drop of 6.5% compared to the same period in 2016.

The GDP report said: “This is estimated to be the eighth consecutive quarter of decreasing construction output in Scotland, following a period of exceptionally high growth in the sector during 2014 and 2015.”

Liberal Democrats branded the figures “pathetic”, with economy spokeswoman Councillor Carolyn Caddick stating: “People will be disappointed that for all their speeches SNP ministers have not been able to keep pace with the growth in the rest of the UK. UK growth itself is pretty pathetic.”

Jamie Hepburn, Minister for Employability and Training, said: “With four consecutive quarters of positive growth in 2017, Scotland’s economy continues to show strength.  Compared to the same point in 2016, Scotland’s economy grew by 1.1%, growing 0.3% during the final quarter of 2017.”

He added: “These figures are welcome, but we are determined to do more to grow our economy and protect Scotland from the headwinds of Brexit.

“The Scottish Government is investing a record £2.4 billion in enterprise and skills, £4 billion in new infrastructure and £600 million in broadband, to ensure every home or business premise in Scotland has access to superfast broadband and that we can secure the benefits of the digital economy – a commitment unmatched across the UK.

“And we are preparing for the future with investments in a new National Manufacturing Institute and the establishment of the Scottish National Investment Bank.

“As we face the potential impact of Brexit to come, the Scottish Government is determined to protect Scotland’s economy and ensure our potential is not derailed by damaging decisions of the UK Government.”

Mr Mundell said it was “good news” that GDP in Scotland continued to grow.

The UK Government minister added: “I note a modest improvement in Scotland’s important services sector, and encouraging growth in production industries.

“However, it is increasingly concerning that a significant gap persists between Scotland’s economy and the rest of the UK.

“The Scottish Government has the powers to boost productivity and strengthen the economy, and must use them to close this gap. By making Scotland the highest taxed part of the UK, the Scottish Government risks damaging, rather than growing, our economy.”

Source: BT.com

Government too ‘distracted’ by Brexit to kick-start UK growth – business group

March 20, 2018

Despite raising its GDP forecast, the British Chamber of Commerce said it had “serious concerns” over the lack of a plan to protect growth against future challenges.

The Government has become “distracted” by Brexit and failed to stimulate economic growth in the UK, the head of the British Chamber of Commerce (BCC) has said.

The business group raised its GDP forecast for 2018 from 1.1% to 1.4%, and 1.3% to 1.5% for 2019, saying this was a result of stronger than expected consumer spending.

Its first forecast for 2020 predicts growth of 1.6%.

But despite the upgrades, UK growth is set to remain well below the historical average throughout the forecast period.

The biggest brake on higher UK growth is a lack of concerted action to ‘fix the fundamentals’ here at home

BCC director general Dr Adam Marshall

The latest forecast also implies the country will remain among the worst performing economies in the G7 until 2020 at the earliest.

Dr Adam Marshall, director general of the BCC, said: “Political uncertainty aside, the biggest brake on higher UK growth is a lack of concerted action to ‘fix the fundamentals’ here at home, with Government attention distracted by Brexit.

“The power to kick-start the UK economy, and raise the trend rate of growth above the current sluggish levels, lies in Westminster, not in Brussels – and businesses will respond to action by delivering investment, higher productivity, and the increased wages we all want to see.”

The business group also said it expects public sector net borrowing over the next three years to be £13.4 billion higher than predicted by the Office for Budget Responsibility in last week’s Spring Statement.

In 2017/18, the BCC predict that public sector net borrowing will total £49.7 billion, falling to £45.8 billion in 2018/19 and £34 billion in 2019/20.

Further positive change is expected in the growth of average earnings, which the BCC upgraded from 2.5% to 2.7% in 2018 and forecast rises of 2.9% in 2019 and 3.0% in 2020.

And inflation is expected to decrease, with 2.9% forecast for this year, 2.6% in 2019 and 2.2% in 2020.

The UK’s export performance is expected to remain robust on the back of strong global growth, particularly in key markets such as the Eurozone and US.

Imports are also likely to continue to grow, meaning the contribution of net trade to UK GDP growth over the near term is to be limited.

Dr Marshall said: “While many individual businesses are doing well, the inescapable conclusion from our forecast is that the UK economy as a whole should be performing better than it is, given robust and sustained global growth.

“Although strong global conditions have given the UK a bit of a boost through higher export demand in recent months, we have serious concerns about the potential for further growth here at home when the performance of key trading partners slows.

“Sustained skills and labour shortages are also a real issue, with businesses reporting significant difficulties recruiting and retaining the people they need.”

Suren Thiru, the BCC’s head of economics, added: “Our forecast implicitly assumes a relatively smooth Brexit with a transitional arrangement where trading conditions will be largely unchanged.

“Failure to achieve such an outcome would likely weigh on UK economic activity over the near term.”

Source: BT.com