Scotland’s economy outperforms UK in final three months of 2018
Latest figures show economic growth for the eighth consecutive quarter, but finance secretary warns that Brexit poses a ‘threat’ to stability.
Scotland’s economy grew more than that of the UK in the final three months of 2018.
The latest GDP figures showed a rise of 0.3% in the period October to December – making this the eighth consecutive quarter of economic growth.
The rise was above the 0.2% recorded for the UK as a whole over the period, as the economy slowed.
And with official figures on Tuesday showing Scotland’s jobless rate at a record low of 3.4%, Finance Secretary Derek Mackay insisted the country’s economy “continues to go from strength to strength”.
📢 The latest GDP figures show the Scottish economy grew by 0.3% in the fourth quarter of 2018, higher than the UK rate of 0.2%. Compared to the same period last year, it has grown by 1.3%. 👇https://t.co/jBjcWsSFfz pic.twitter.com/K1BhQADyIK— ScotGovEconomy (@scotgoveconomy) March 20, 2019
But with the UK due to quit the European Union in little more than a week, he warned of the impact Brexit would have.
“The UK’s EU exit remains the biggest threat to our economic stability,” the finance secretary said.
“All forms of exit will cost jobs, make people poorer, damage our society and undermine the democratic decision of the people of Scotland to remain in the EU.”
He spoke out after GDP figures estimated that the Scottish economy had grown by 1.4% in 2018 compared to the previous year – the same as the UK as a whole.
In the final three months of 2018 growth in services – which makes up the bulk of Scotland’s economy – and construction sparked the overall rise in GDP, with theses sectors groWing by 0.5% and 0.8% respectively.
However the production sector shrank by 0.9% in October to December, with agriculture, forestry and fishing down by 1.1%.
Scottish secretary David Mundell said: “I am encouraged by today’s GDP figures which show Scotland’s economy continuing to grow.”
But the UK Government minister also said he was “concerned the Scottish economy has not shown the same growth as the UK as a whole over the past few years and it is important to close the gap”.
Mr Mundell hit out at the Scottish Government’s policy of increasing income tax for higher earners north of the border, arguing: “The Scotland Act 2016 gives the Scottish Government a range of new powers and I want to see them used effectively to boost productivity and strengthen the economy.
“By making Scotland the highest taxed part of the UK they risk damaging, rather than growing, our economy.”
Mr Mackay insisted: “Growing our economy and supporting businesses and jobs is a top priority for the Scottish Government.
“We have provided more than £5 billion of capital investment to grow and modernise Scotland’s infrastructure, and a wider package of support to businesses including maintaining a competitive business rates package and providing the most generous package of non-domestic rates reliefs anywhere in the UK.
“However, the UK’s EU exit remains the biggest threat to our economic stability.
“Our first priority is staying in the EU, in line with the overwhelming vote in Scotland to remain, and we support another referendum on EU membership.
“Short of that, the least damaging option is to remain in the Customs Union and European Single Market of 500 million people – eight times larger than the UK market alone.”
Despite the positive GDP data, economist John McLaren claimed the outlook was “less than bright”.
He said: “Scotland’s GDP growth performance in 2018 was stronger than had been predicted and similar to that of the UK, whilst still being, overall, disappointingly low.
“This better than expected performance was largely down to renewed growth in manufacturing, particularly computer and electrical products.
“The future still looks less than bright however, not just due to potential Brexit impacts but also a concerns over a lack of dynamism in Scottish private Sector services performance.”
Meanwhile Tracy Black, CBI Scotland director, said: “While the latest stats show eight consecutive quarters of growth, overall economic momentum remains worryingly weak.
“What we desperately need is a step-change if the Scottish economy is going to deliver on higher wages, improved living standards and increasing the potential for stronger, sustained growth in the future – an economy that’s barely in first gear isn’t going to cut the mustard.
“Brexit uncertainty continues to be a significant factor behind weaker growth, however the recipe for Scottish economic success remains the same as it’s always been.
“Strong partnership between government and business, focused investment in areas that can boost productivity and building a competitive business environment that helps the private sector grow and invest.”