Scottish economy bouncing back?

Scotland’s economy has returned to growth. Latest figures show an encouraging 0.8% growth in the first quarter of 2017. This improvement follows two periods of decline which some economists believed would result in Scotland moving into recession. Politicians from both sides of the border have welcomed the figures – but Holyrood and Westminster have different interpretations as to why the Scottish economy is showing signs of improvement.

The Secretary of State for Scotland, David Mundell said: “These are very encouraging figures. The Scottish economy is returning to growth and I am pleased to see that the manufacturing sector in particular is making the most of export opportunities.

“But, over the year, Scotland has continued to lag behind the UK as a whole – so there is still a lot of work to do.

“The Scottish Government has extensive powers at their disposal to grow and support the economy and these figures underline the need for our two governments to work together as we prepare to leave the EU.

“Brexit will bring new opportunities. We need to ensure Scottish business can take full advantage.”

The UK Government says is taking concerted action to build a strong economy across all parts of the UK. This includes work on a modern Industrial Strategy, City Deals and supporting businesses beyond the UK market to reach markets around the world through our global network of embassy-based trade experts.

The Scotland Office points out that The Scottish Government have the powers to support the country’s economy, including powers over economic development, taxation, skills, as well as additional borrowing powers to allow them to invest where Scotland needs it. It says Holyrood should be using these to grow the economy alongside the UK, rather than creating huge business uncertainty with the threat of another independence referendum.

Over the past year the UK Government has added over £1 billion to the Scottish Government’s Budget through extra Barnett consequentials. There was an extra £820m in the 2016 Autumn Statement and a further £350m in the 2017 Spring Budget.

The Department for International Trade (DIT) is working to promote shared UK prosperity by financing international trade and investment, and championing free trade across the world.

DIT has worked with Scottish Enterprise; Scottish Development International and Highlands & Islands Enterprise on two Exporting is Great tours of Scotland. We will continue to work together helping companies to potentially expand from London into Scotland and across the United Kingdom.

In 2015/16 Scotland benefitted from 108 new Foreign Direct Investment projects, creating 4,178 jobs.

The UK Government has loaned start-up companies in Scotland millions to help businesses.

While Westminster sees itself as the driving force behind Scotland’s improving economy, the Scottish Government is also keen to take it’s share of the credit for growth that is four times the rate for the UK as a whole. Scotland’s Economy Secretary Keith Brown welcomed the latest figures and said they indicate a ‘welcome vote of confidence’ in Scotland’s economy.

Expansion in the manufacturing sector has helped the Scottish economy to grow by 0.8% – the highest rate of quarterly growth in Scotland since the end of 2014, new figures reveal.

The positive growth figures show the Scottish economy rebounding from negative growth in the previous quarter – with a growth rate for the first quarter of 2017 that is four times the UK wide rate for the same quarter.

Statistics announced by Scotland’s Chief Statistician show:

• The Scottish economy grew by 0.8% in the first quarter of 2017. UK quarterly growth in the first quarter of 2017 was 0.2%

• In the first quarter of 2017, services in Scotland grew by 0.3%, production grew by 3.1%, and construction contracted by 0.7%

• Output in the metals industry, which includes much of the oil and gas supply chain, was up significantly. This follows the re-opening of the Dalzell steel plant after Scottish Government intervention to secure its future, and recent business survey evidence that output in the oil and gas supply chain may be stabilising.

Economy Secretary Keith Brown (above) said: “Today’s figures are welcome and reinforce the fact that the fundamentals of Scotland’s economy are strong. Scotland’s output is now 6% above the pre-recession level and unemployment is at its lowest ever level.

“Since late 2014 our growth rate has been impacted significantly by the fortunes of the North Sea with around two thirds of the slowdown in 2016 attributed to the onshore impact of lower oil prices. Today’s figures show a rise in output in industries linked to the North Sea for the first time since 2014. While there is no room for complacency, these figures – alongside a number of recent business surveys – indicate that there is growing confidence in the sector.

“Manufacturing output is also up, in part due to the resumption of steel production at the Dalzell plant after the Scottish Government intervened to save this key strategic asset. The re-opening of Dalzell is just one of the actions the Scottish Government is taking to boost manufacturing – we are also supporting expansion of the aluminium smelter at Lochaber and the development of a new manufacturing centre in Renfrewshire.

“While today’s figures are positive, we will continue to do everything possible to support the performance of Scotland’s economy, particularly as Brexit uncertainty continues to cast a shadow over the future economic outlook. The Scottish Government will continue to use all of the powers at our disposal, including our £6.5bn infrastructure plan and our new £500 million Scottish Growth Scheme which opened for bids last month. We will also continue to invest in the doubling of free childcare and offer support for key industries including oil and gas, manufacturing, tourism and new technologies.

“Today’s figures are a welcome vote of confidence in our economy and the Scottish Government will continue to work hard to support it through difficult times ahead.”