Scotland's economy grows by just 0.1%

production site The strongest growth was from the production sector - including manufacturing.

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Scottish economic growth has dipped again, with the economy growing by 0.1% during spring, according to Scottish government figures.

In the second quarter of this year, the UK economy is also thought to have grown by 0.1%.

The figure is only just above the level that would put the country back into recession.

Activity across the economy grew by 1.1% in the four quarters to this summer. Across the UK, it grew by 1.5%.

The strongest growth was from the production sector, including manufacturing, but primarily driven by strong growth in electricity, gas and Scottish Water.

Output in the construction sector fell by 2.3%. The large services sector grew by 0.1%, helped most by the distribution, hotels and catering sector.

The Scottish government's quarterly publication has revised the growth figures for previous quarters. The first three months of this year were better than previously thought, up from 0.1% to 0.2%.

The third quarter of last year was better as well, up from 0.4% to 0.5%.

The deep fall in the weather-hit final quarter of last year was worse than previously thought, down from a contraction of 0.5% to a fall of 0.6%.

Analysis

We are getting a changed picture about the Scottish economy emerging from the latest growth figures.

While it is no surprise that the figures for April, May and June look sluggish - and we should be less surprised if they are getting worse in the second half of this year - Scottish government economists have looked again at their previous estimates for growth a few years back, and it has changed them.

Analysis from the Centre for Public Policy for Regions shows that, before the recession, Scotland performed more poorly than previously thought, relative to the UK as a whole.

From 2002 to 2007, it was thought Scotland outperformed the UK, but now it matches it.

Since that peak, the close link between Scottish and UK growth paths has continued.

That is not to say there will not be more revisions. But it is important to the political argument over Scotland's relative position, and whether it could do better with a different set of powers at Holyrood.

John Swinney, the Scottish finance secretary, said: "While Scotland's economy continued to grow in the second quarter of 2011, and the Scottish labour market continues to outperform the UK as a whole, these figures reinforce the urgent need for the UK government to deliver a Plan MacB approach, to ensure that the recovery we are building here in Scotland is not derailed by Westminster's wrong-headed economic policy.

"This must deliver real action in the areas where Scottish government policy is making a difference: increased capital expenditure, improved access to finance for medium and small-sized businesses, and the introduction of measures to boost consumer confidence and economic security."

The SNP minister highlighted production sector figures that grew by 1.7% during the quarter, while the UK figure for production fell by 1.2%.

"The Scottish government is using all of the economic powers at our disposal to secure new jobs and investment, and strengthen recovery," said Mr Swinney.

"This approach has helped to maintain employment at higher rates than the rest of the UK for the last 11 months.

"With control of the main economic and financial levers, such as corporation tax and borrowing powers, the Scottish government could do more to maximise our economic potential, because there is no doubt that more needs to be done."

'Going backwards'

Scottish Labour said the figures were "deeply worrying".

Finance spokesman Richard Baker MSP said: "These figures show Scotland teetering on brink of recession and that the economy is actually going backwards. The SNP's economic plan simply isn't working.

"For the last 12 months the Scottish economy has grown even more slowly than the rest of the UK.

"Far from the SNP's Plan MacB working, it is actually making things even worse with persistent stagnation, rising unemployment and fears for key sectors."

Scottish Lib Dem deputy leader Jo Swinson said: "We welcome the news that the Scottish economy is growing especially when we look to some of our European neighbours.

"But the figures compared to the rest of the UK cast real doubts over the claims by SNP ministers to have created a successful 'Plan MacB'."

She added: "Scottish ministers should revisit their decision to take £250m away from the transport infrastructure budget to spend elsewhere.

"They should drop their refusal to use money that they have locked in Scottish Water to benefit the construction industry, not least new affordable housing."

Iain McMillan, director of employers' organisation CBI Scotland, said: "Scotland's economic recovery is tepid and lacks any discernible vigour and momentum, with expansion in some sectors being offset by weaker performance in others.

"That is why we continue to argue that the Scottish government's spending plans should be improved in order to better galvanise growth.

"A far bolder approach to making savings is required, in order to release monies for further investment in infrastructure and support for exporters, and so that the two business tax rises - on retailers and empty commercial premises - can be scrapped."

Andy Willox of the Federation of Small Businesses said: "Unsurprisingly, anxious Scottish businesses and consumers, facing or worried about unemployment, lack the confidence to spend and invest - resulting in today's stagnant GDP figures.

"We need to see continued and co-ordinated action by government at all levels to boost small businesses and help them create the new private sector jobs the economy urgently needs.

"Further, many of the smallest small businesses, like households, are being put under real pressure by rising energy and fuel costs."

He added: "Big energy companies, like the banks, are making it difficult for the small business community to drive the recovery."

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