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Scottish economy grew 0.4% prior to Brexit vote

Published 12/10/2016

Figures show output in the Scottish economy was up 0.7% on the same quarter last year
Figures show output in the Scottish economy was up 0.7% on the same quarter last year

Scotland's onshore economy grew during the second quarter of the year, according to new figures.

Over the period April to June, gross domestic product (GDP) rose by 0.4% compared to the previous three months. Over the same period UK growth was 0.7%.

The figures, which do not include North Sea oil and gas extraction, show output in the economy was also up 0.7% on the same quarter last year.

During the three-month period, services in Scotland grew by 0.5% and production was up 0.3% - but construction contracted by 1.9%.

Business services and finance made the greatest contribution to growth, while the electricity and gas sector contributed most to contraction in the economy.

The figures mostly cover the period before the UK voted to leave the EU on June 23.

Economy Secretary Keith Brown highlighted measures being taken to support business in the wake of the vote, including a £500 million Scottish Growth Fund, and repeated calls for the UK Government to bring forward a capital stimulus package similar to a £100 million commitment in Scotland.

He said: "These figures show that prior to the vote to leave the EU, Scotland's economy was growing.

"Despite concerns surrounding the EU referendum, the fundamentals of Scotland's economy are strong and recent successes, such as Scotland securing more foreign development investment projects in 2015 than any other part of the UK outside London, are to be welcomed.

"The Bank of Scotland's latest PMI showed Scotland's private sector output expanding in September and our labour market now showed record quarterly growth employment over May-July 2016, and the unemployment rate is now below that of the UK.

"But in the months surrounding the EU referendum, there is no doubt that businesses faced challenging circumstances and damaging uncertainty. These are global issues and Scotland is not immune.

"We have constantly made clear our concerns that the vote will have a negative impact on investment and our economy. That is why protecting Scotland's relationship with the EU, and continued membership of the single market, is crucial - so we can build on some of these positive economic trends rather than have this progress placed under serious threat."

Liz Cameron, chief executive of Scottish Chambers of Commerce, said: "It is good news that Scotland's economic growth rate increased in the second quarter of this year, but there is still a great deal of work to be done.

"To put this in perspective, the Scottish economy has grown in a year at almost the same rate that the UK economy has grown in just three months.

"These figures underline the fact that Scotland's economic performance has been significantly lower than that of the UK as a whole for a full year and, whilst we are now seeing welcome growth in our production and service sectors, construction has been contracting at a significant rate for two consecutive quarters."

The organisation called for the Scottish Government to revisit a policy to scale down business rates reliefs on empty properties, which it argued was "discouraging speculative development and reducing the opportunities available for construction businesses".

Colin Borland, the Federation of Small Businesses' head of external affairs in Scotland, said: "These pre-referendum statistics might feel like a history lesson, but they teach us that Scottish growth was weak even before June's historic vote.

"Scotland needs to strive for growth levels at least as good as the UK average. We look forward to the SNP talking business when they meet in Glasgow this week.

"In addition, the UK Government needs to put the welfare of the economy at the top of its priority list as it formulates its approach to leaving the EU. The litmus test for every Brexit policy must be the impact on our high streets, small businesses and local communities."

Scottish Conservative economy spokesman Dean Lockhart said: "We welcome the fact that Scotland's economy has experienced some growth over the past three months.

"But we have to recognise that economic growth of 0.4% simply isn't good enough when you compare that to the rest of the UK.

"The Scottish economy continues to massively under-perform in relation to the rest of Britain's, and that's entirely on the SNP's shoulders."

He added: "As the SNP prepares for its conference, instead of stoking uncertainty with more independence threats, it should be thinking about how to address its decade-long failure of Scotland's economy."

Scottish Labour economy spokeswoman Jackie Baillie said: "The Tories and the SNP need to recognise that constitutional posturing won't stimulate the economy, create jobs or protect public services.

"Scotland is now lagging behind the rest of the UK and there will be increasing uncertainty for our economy thanks to the Tories' reckless Brexit gamble. Both the SNP and Tory governments need to take action now."

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