Scotland business

Scotland's economy grows but more slowly than the UK as a whole

House under construction Image copyright PA
Image caption Scottish construction sector output grew by 17.3% on an annual basis

Scotland's economy grew slightly over the summer but continued to lag behind the UK as a whole, according to official figures.

Total output grew 0.1% between July and September - 1.7% higher than the same quarter last year.

By comparison, UK growth was 0.4% and 2.1%, respectively.

The latest figures showed production output fell by 1% over the quarter, while services grew by 0.3% and construction by 0.9%.

Scotland's economy has now grown for 12 quarters in a row - the longest stretch of continuous growth since devolution.

Output is 3.1% above its pre-recession peak.

Production output was flat over the year and down over the quarter, which government statisticians said reflected the "difficult conditions" facing manufacturing and production in general.

ANALYSIS

By Sarah Smith, Scotland Editor, BBC News

Image copyright PA

Economists say the drag on the Scottish economy is largely due to the effects of the falling oil price.

No-one knows the health of the local economy better than a used car salesman - Stuart Benzie runs Westhill Cars.

The high-end premium cars, the Audis, BMWs and Jaguars are still parked at the front at of the lot. But he knows customers are looking for lower priced models these days.

Much of his custom comes from people trading in more expensive cars for cheaper ones.

He told me about a woman who came in recently to buy a nice car, she agreed a loan and left happy about her new motor.

Three days later she came back to explain that she had just been told she was losing her job and could no longer go through with the purchase.

No sale for Stuart, no business for the loan company and financial disaster for the customer who'd been made redundant.

A tale that sums up the economic crisis hitting the North East of Scotland.

Read more from Sarah

However, the figures showed that there was growth of 2.7% in the food and drink subsector over the quarter.

Construction output grew by 0.9% in the third quarter, following growth of 3.4% in the previous quarter.

On an annual basis, construction grew by 17.3%.

Services output grew by 0.3%, after growing by 0.1% in the previous quarter. Output over the year is 0.7% higher.

Image caption Source: Scottish government statistics

Deputy First Minister John Swinney said: "Today's figures show further growth in the Scottish economy during a period of significant challenge for our key export markets and in particular for the energy sector in Scotland given the impact of lower commodity prices.

"It is encouraging that growth has remained positive given these strong economic headwinds and, in particular, that the service sector which accounts for around three quarters of the output of the economy has continued to grow by 0.3% over the quarter. This, in part, has been driven by strong growth in the accommodation and food, and retail and wholesale subsectors.

"Expansion in the construction sector continues to show the benefits of the Scottish government's decision to invest in Scotland's infrastructure, with key projects such as the Queensferry Crossing helping to underpin growth."

'No room for complacency'

The UK government's Scotland Office Minister, Andrew Dunlop, said: "I am very pleased that the latest figures show that Scotland's economy has grown continuously for three years.

"But of course, there is no room for complacency.

"As the chancellor made clear last week, there are a number of significant risks to our economy in 2016, including a slowdown in emerging markets and global economic growth.

"The UK government has a long-term economic plan to strengthen Scotland's economy, to continue to deliver growth at home and protect our economy from risks abroad.

"We will continue to work with Scottish businesses to support growth and help Scotland prosper - including through our highly competitive corporate tax system and continuing to develop initiatives like City Deals.

"The Scottish government also needs to do all it can to support businesses, including through education, training and business rates."

'Nuanced picture'

CBI Scotland director Hugh Aitken said the figures showed that Scotland's economic growth tailed off sharply during 2015.

He added: "Manufacturing acted as a drag in quarter three while the service sector was more resilient.

"But even here the picture is nuanced, with consumer-facing sectors doing better than other services' firms.

"Looking ahead, while lower energy costs and inflation will boost households' purchasing power, Scotland remains vulnerable to renewed falls in global oil prices, as many key players in the industry's supply chain are located here."

Scottish Liberal Democrat leader Willie Rennie said the latest GDP figures would "send a worrying shiver down the spines of business across Scotland", as they showed "Scottish economic performance is falling back behind the rest of the UK despite the promises from SNP ministers".

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