Scottish economy outstrips rest of UK

15 Aug 18

The Scottish economy is showing signs of outstripping that of the rest of the country, according to significantly revised growth figures released by the Scottish Government.

Newly published national accounts show Scottish GDP expanded by 0.4% in the first quarter of the year, compared to just 0.2% across the UK as a whole.

The growth figure was revised up from the first estimate of 0.2% published in June as a result of new data and methodological improvements.

Compared to the same period last year, GDP growth in Scotland increased by 1.3%, up from an initial estimate of 0.8%, compared to 1.2% across the UK as a whole.

The figures were described by economy and finance secretary Derek Mackay as “hugely encouraging”.

He said the growth in manufactured exports – up 3.6% in volume terms during the first quarter - reflected the strength of international exports to the Scottish economy.

“We will continue to urge the UK government to commit to remaining in EU single market and customs union to protect jobs and investment and remove unnecessary uncertainty which could harm Scotland’s economic prosperity,” said Mackay.

The Fraser of Allander Institute said the revisions to statistical data were “much more significant than usual” and meant that while growth in 2014 and 2015 had been lower than previously thought, growth in 2016 and 2017 had been much stronger.

“Economic and fiscal forecasting is now at the heart of determining the Scottish Government’s budget, and the official data produced by the Scottish Government is an essential part of the production of these forecasts,” it said.

“Growth in recent years in particular can influence forecasts of growth, and therefore tax revenues. The Scottish Government, and the Scottish Fiscal Commission, will have to consider what [these] revisions mean for the forecasting process underpinning the Scottish Budget.”

According to economist John McLaren, the main reason for the scale of the revision was the “vastly inflated” estimates of growth within the construction sector in previous years.

The fact that action was not taken more quickly to address this anomaly was a cause for concern, he said.

“Such large and late revisions make it difficult to seriously analyse Scottish economic performance,” he said.

However, he said that the rate of growth seen since 2010, averaging 1% a year, was still weak.

“The revised figures for Scottish GDP show a better performance of late than had been previously estimated but the post-recession performance remains poor, in fact overall worse than before,” he said.

Did you enjoy this article?

Top