Scotland business

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

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 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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