Scottish economy out of recession after third-quarter growth of 0.6%


The Scottish economy comes out of recession as new figures from the Scottish government show it grew by 0.6% in July to September

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The Scottish economy moved out of recession between July and September, growing by 0.6%, according to official figures.

On an annual basis, Scottish Gross Domestic Product (GDP) grew 0.4%.

The Scottish government said output in the services industries grew by 0.3%, but output in construction contracted by 0.4% during 2012's third quarter.

During the same period, the whole UK economy grew by 0.9%, helped by spending on the Olympics.

That has been followed by a first estimate of GDP for October to December 2012 that indicated the UK economy contracted by 0.3%, threatening a triple dip recession

Underlying the headline figures, the strongest growth in July to September was in manufacturing, up by 3%, while electricity and gas production rose 1.9%.

A fall in electricity generation had been one reason for poorer figures in the second quarter of the year.

Tourism did not perform as badly as feared last summer and, included in the figures for the "distribution, hotels and catering" sector, it grew by 1.1%.

Deeper contraction

The shape of the downturn in Scotland has changed quite a bit. There's a return to growth after recession and it's stronger than expected.

Overseas visitor numbers, down by 2012, suggested that the Olympic bounce not only failed to reach Scotland but was bad news for tourism. However, the GDP figures don't make things look so bad for the hospitality sector.

The recession of last winter has changed shape too. It's shorter than previously thought, starting in January of last year rather than October 2011. And it was deeper in the first quarter of last year than we were previously told, with the second quarter less deep.

With an upgrade of the methodology behind these figures, the period going into the downturn also looks different now. The end of the boom years, from early 2007 until the peak of output in mid-2008, had a total rise in growth of 1.4%, lower than the previous reckoning of 1.8%.

And, as the economy tipped into recession, it fell by slightly less than we were previously led to believe, down by 5.6%.

We're still some distance from making up that lost ground and, despite good news with the most recent figures, the course of the economy over the end of last year and the start of this one is still looking bumpy.

The large business services and finance sector grew by 0.9%, but there were falls in transport, storage and communication - down by 1.5%.

These latest figures also show revisions to estimates for previous quarters, indicating that the recession of last winter was shorter than previously thought.

There was a small amount of growth in the final quarter of 2011, up by 0.1%, whereas it had been thought to decline by 0.4%.

That was followed by a deeper contraction in the first three months of 2012 than initially reported, down by 0.5% compared with the previous estimate of 0.2%.

From April to June 2012, output fell by 0.1%, whereas it was previously thought to have had a deeper decline of 0.4%.

Finance Secretary John Swinney said: "These figures show that the Scottish economy has returned to growth after two quarters of contraction.

"However, there is no room for complacency. Recovery remains fragile and the UK government's continuing inaction risks a return to recession for the third time since the financial crisis of 2008.

"In contrast, the Scottish government will continue to do all it can to strengthen economic growth and create jobs. Next week, we will conclude our negotiations with parties across parliament to deliver a budget for jobs and growth.

"Our budget prioritises construction, skills, employment and a green economic stimulus."

Liz Cameron, chief executive of Scottish Chambers of Commerce, thought another difficult year was in store despite the third quarter growth.

'Treading water'

"With our own Scottish Chambers of Commerce Quarterly Business Survey projecting only a marginal improvement in output and confidence in the early part of 2013, these latest figures underline the picture of an economy that has been treading water for an extended period of time," she said.

Scottish Building Federation Executive Director Michael Levack thinks that the latest figures "paint an overly optimistic picture of the construction sector's performance in the course of last year".

"Figures for the Scottish construction industry published back in December show industry output declined by 12% over the year to September 2012, a reduction of £1.3 billion in the annual value of the industry to the Scottish economy," he said.

Scottish Liberal Democrat leader Willie Rennie suggested the SNP administration could be doing more to boost the economy.

"The growth figures for Scotland are welcome, even if they are still behind the rest of the UK," he said.

"The message to the Scottish government is that it cannot afford to dither any further on getting capital investment projects up and running.

"They fell short by £300m this year with their Futures Trust and have declined to start identifying projects in 2014 to use the extra capital resources provided by the UK government."

Scottish Secretary Michael Moore added: "Today's positive GDP figures are good news and very encouraging for Scotland's families and firms."

Scotland's third-quarter growth of 0.6% was better than the UK economy as a whole, which only grew by 0.1% over the year.

That return to growth during the third quarter of 2012 also outstripped the performance in the same period the previous year, when the economy grew by 0.4%.


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  • rate this

    Comment number 452.

    The Greek good to see you are so eloquent in your posts, FYI the same people down South really couldn't give a damn if Scotland remains in the Union or goes....what they are interested in is the chance of a referendum for EU membership...sorry to diddle on your bonfire but the majority of the English don't really care if Scotland stays or goes. So good luck if you go and if you stay

  • rate this

    Comment number 451.

    if we get independence ... can we just ignore them lol... i have another question for the ballot... q1: do u want scotland to be independent? yes/no.. it should be back up with... q2: if scotland is independent u dont have to listen to those a'holes down south so the answer is yes :D

  • rate this

    Comment number 450.

    who care the percentages, england acquired scotland through silly politics. those same politics can only exist if a small country like scotland can cause westminster so much harm. Let the english keep saying yes to every tax, it won't happen here regardless, if they are so worried about it then why moan so much... looks like we aren't the dour sour after all

  • rate this

    Comment number 449.

    448. telemark lozzie
    Thanks for an interesting evening, if independence is what you are after, i sincerer hope you get it. I also hope that you and I do not come to regret it. But i suppose that is sitting on the fence.

  • rate this

    Comment number 448.

    446. paulmerhaba "the beeb do not agree that politicians are the tools of democracy"

    We are the tools of democracy, and that comes with it responsibility.

    "If you do not need the media to think, or politicians promises,what is left?"

    It depends on what you expect to get from the media or politicians.But its easier now to get a far wider range of informed opinions now than a generation ago.


Comments 5 of 452


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