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Holyrood ministers criticised as figures show economic slump against UK growth

Nicola Sturgeon's "mismanagement" of the economy has come under fire after new figures showed GDP north of the border shrank in the final three months of 2016.

While the UK economy as a whole grew by 0.7% over the period October to November, new figures for Scotland revealed a drop of 0.2%.

Opposition politicians warned Scotland could be on the brink of a recession while business leaders demanded urgent action from SNP ministers, calling on them to abandon the party's "high tax agenda before it is too late".

The contraction in GDP came as revised figures from the Scottish Government showed the country's economic output increased by 0.1% over the period July to September 2016.

According to the data, Scotland's economic output was flat when comparing the fourth quarter of 2016 to the same period in 2015 while the UK experienced growth of 1.9%.

Over the 12 months of 2016, Scottish GDP grew by 0.4%, lagging behind the 1.8% increase seen across the UK as a whole.

Scottish Finance Secretary Derek Mackay said the figures reflected the "economic reality of the Brexit vote" in June 2016.

With the First Minister pressing for a second independence referendum to be held, opposition politicians at Holyrood urged her to "get back to the day job".

Tory finance spokesman Murdo Fraser said: " Nicola Sturgeon's Scottish Government must take responsibility for this mess.

"She has made Scotland the highest-taxed part of the UK and created more instability and uncertainty with her threat of a second referendum. Now we see the real-life impact of her mismanagement.

" More than ever, Scotland needs a First Minister in charge who gets back to her desk, ends her obsession with a second referendum and focuses on her day job."

If GDP figures for Scotland over the period January to March 2017 also show output shrinking, the country will officially be in recession.

Scottish Liberal Democrat leader Willie Rennie said: " Given the lag in publishing figures, we may already technically be in another recession.

"No Scottish Government ministers have acknowledged this risk and the role played in it by their independence obsession.

" Instead of playing the blame game, the Scottish Government should be setting out clear and credible plans to turn this around."

Liz Cameron, chief executive of the Scottish Chambers of Commerce, said: " While Scotland's growth has been sluggish since the fall in oil prices in 2015, the evidence now shows that no sector in the Scottish economy is experiencing growth, with production and construction falling and our service sector flatlining.

"This news must now bring an urgent change in policy from the Scottish Government in particular.

"The Scottish Parliament has just introduced a Budget in which medium and large businesses pay a higher rate of business rates than they would in England and where Scottish higher-rate taxpayers pay more tax than they would anywhere else in the UK.

"It is time for the Scottish Government to abandon this high tax agenda before it is too late as these policies risk driving investment out of Scotland."

The GDP figures were released at the same time as former Scottish Government justice secretary Kenny Macaskill warned a second referendum on independence would have implications for other areas.

Mr MacAskill acknowledged that another vote on the issue would ''slow'' the wheels of government but said the impact of Brexit would be far worse across the UK.

Mr Mackay said: "Scotland's economy faces continued headwinds, such as the slowdown in the oil and gas sector and weak global demand

"Despite these challenges, the foundations of our economy are strong with growth in 2016, unemployment falling and early signs that the situation is improving for North Sea operators.

" Before the EU referendum, the UK Government told us Brexit will make us 'permanently poorer'. What is now quite clear is the economic reality of the Brexit vote.

"We have already seen significantly lower consumer confidence in Scotland since the vote last summer.

"Now we see that feeding through into our growth figures and all of this is before the UK actually leaves the EU."

Scotland Office Minister Lord Dunlop said: "T he simplest way to provide more certainty for people and businesses across Scotland would be to take a second independence referendum off the table.

" Scotland's economy is now a real cause for concern with a fall in economic output over the last three months of 2016.

"The UK Government is working hard to release our potential through the industrial strategy, city region deals and a £1.2 billion funding boost for the Scottish budget."

Labour economy spokeswoman Jackie Baillie said the GDP figures "p rovide further compelling evidence that the last thing Scotland needs is another divisive independence referendum".

She added: " Scotland's economy shrank in the final quarter of 2016 and continues to lag way behind the UK's.

"But rather than focusing on boosting growth by investing in the economy and creating jobs, Nicola Sturgeon is swanning around the US talking up the prospects of another independence referendum.

"The SNP should take a second referendum off the table and get back to governing the country."

GMB Scottish secretary Gary Smith claimed politicians "seem to be more interested in pursuing their own pet projects" than dealing with the economic issues.

He said: "The news is full of political noise at the moment - but underneath all the words is a harsh, tough reality for the people of Scotland.

"These figures must act as a wake-up call to our politicians before they sleepwalk back to recession."

Professor Graeme Roy, director of the Fraser of Allander Institute economic think tank, described the Scottish GDP figures as "deeply disap pointing".

He stated: " We previously warned that this was a fragile time for the Scottish economy and that a contraction in output towards the end of 2016 was entirely possible. Sadly, these fears have now been realised.

"With the Scottish economy shrinking in the final quarter of 2016, this means that the Scottish economy did not grow at all through 2016.

"At a time when the UK economy grew at 1.8% over the same period, this is a serious cause for concern. With any Brexit uncertainty affecting the UK as well, it's hard to argue that Scotland's relatively weaker performance can be explained by the outcome of the EU referendum."

Professor Roy said the downturn in the oil and gas industry was " part of the explanation" for the slump, but added there had been "substantial declines" in construction and manufacturing, and that the "all important Scottish services sector" experienced no growth during the last three months of 2016

"Today's figures therefore confirm a more general slowdown in Scotland's economy," he said.

"For both the UK and Scottish Governments, it is hard to imagine a clearer call for practical and direct action to support the Scottish economy than the data released today."

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