Scotland's economy grows by 0.2%

Image source, Getty Images

The Scottish economy grew by 0.2% during the third quarter of last year, according to official figures.

Between July and September, services grew by 0.2%, while production was up by 1.2%. However, construction was down for a seventh quarter in a row, with a 2.9% fall.

On an annual basis, the Scottish economy grew by 0.6%, compared with 1.7% for the UK as a whole.

The latest quarterly figures also showed that GDP per person, which shows economic growth after taking population changes into account, was flat at 0%.

The Scottish government said the economy had remained resilient despite "a challenging economic environment" and continued Brexit uncertainty.

Analysis by Douglas Fraser, BBC Scotland business and economy editor

Image source, Getty Images

The latest figures for output from the economy show double the rate of growth in the second quarter of last year. But as that was 0.1%, it couldn't have been lower without stalling.

The rise in Gross Domestic Product (GDP) was half the rate of growth of the whole UK, which at 0.4% is not good either.

Scotland's Economy Secretary, Keith Brown, said it was "particularly heartening" to see services continue to expand, and production up by 1.2%, with a return to growth for manufacturing.

He said: "While these figures show a fall in construction output, this is as a result of activity returning to more normal levels following our increased investment in large transport infrastructure developments over recent years, including the Forth Replacement Crossing, M8 missing link and the Borders Railway.

"Our determination to seize opportunity and grow our economy is demonstrated by the £270m increase on economic spending we announced in the 2018-19 draft budget.

"However it cannot be stressed enough that the single biggest threat to our economy as a whole remains the lack of clarity from the UK government over Brexit."

Scottish Secretary David Mundell said the figures showed the Scottish economy growing "much more slowly than we would like, and continuing to lag behind that of the rest of the UK".

He added: "The UK government is investing - including with an extra £2bn announced in the budget - to increase prosperity in Scotland, and I urge the Scottish government to use its extensive new powers to do the same.

"But its recent decision to make Scotland the highest taxed part of the UK risks damaging, rather than growing, our economy."

Image source, Getty Images
Image caption,
The construction sector saw output fall for a seventh quarter in a row

Fraser of Allander economic research institute director Prof Graeme Roy said Scottish economic growth remained "fragile and below trend".

He added: "The figures once again highlight divergence in performance across industries in Scotland.

"Whilst services and production grew - the latter driven by strong growth in electricity production - construction output fell for the seventh consecutive quarter.

"The fall in construction activity of 7.5% over the year has acted as a major drag on the Scottish GDP numbers, suggesting that the weak GDP numbers cannot just be explained by what has happened to the oil and gas sector."

Image source, PA

The Scottish Retail Consortium welcomed growth of 0.7% in the retail and wholesale sector during the third quarter.

Director David Lonsdale said: "These welcome figures come at a time when retailers continue to grapple with changing shopping habits and rising cost pressures, and with predictions of choppier times ahead for consumer spending as inflation continues to outstrip wage growth.

"However, the lack of significant growth in the wider economy is a source of concern for retailers looking to grow their sales."

'Worrying picture'

Scottish Trades Union Congress (STUC) general secretary Grahame Smith said the latest figures painted "a worrying picture".

He added: "In particular the fall in output in the construction industry reveals a serious weakness within our economy, with this being the seventh consecutive quarter of decreasing output.

"The dramatic collapse of Carillion, who have been awarded a number of Scotland's construction contracts, risks a domino effect and further contraction within the Scottish construction sector.

"Urgent action, including through direct government intervention, must be taken to boost investment in this sector and prevent a knock on impact to other sectors of the economy and the labour market."