Economic growth in Scotland double estimated level in first quarter of 2018

Glass of whisky - Image credit: Press Association

Economic growth in Scotland at the beginning of 2018 was double what was previously estimated, official figures have shown.

Quarterly figures show Scotland’s GDP growth for the first quarter of 218 was 0.4 per cent rather than the 0.2 per cent estimated in June.

This puts Scottish growth at double the level of the UK economy as a whole in the same period, which was 0.2 per cent.

The new figures mean that the Scottish economy grew by 1.3 per cent in a year, revised up from 0.8 per cent, slightly above the UK level of 1.2 per cent.

Much of the growth was driven by manufacturing exports, particularly food and drink and engineering products, which increased by 3.6 per cent, although this followed a drop of 3.7 per cent in the previous quarter.

On a rolling annual basis, the volume of manufactured exports increased by 8.7 per cent.

Output in the production sector grew by one per cent, output in the services sector grew by 0.4 per cent, but output in the construction sector fell by 1.4 per cent.

However, the figure for construction has been revised up from a first estimate of -3.5 per cent due to data updates and methodology improvements in calculating the figures.

Meanwhile, inflation increased for the first time since November 2017 from 2.4 per cent in June to 2.5 per cent in July 2018.    

Commenting on the statistics, Economy and Finance Secretary Derek Mackay said: “It is hugely encouraging to see the Scottish economy grow by 0.4 per cent in the first quarter of 2018, meaning that over the year since 2017 Quarter 1, the Scottish economy has grown by 1.3 per cent. 

“Figures for the first quarter of 2018 also show that manufactured exports, which make up around half of the total value of exports from Scotland to the rest of the world, have grown by 3.6 per cent reflecting the strength of international exports to the future of the Scottish economy.  

He added: “The Scottish Government will continue to focus on growing Scotland’s economy.

“We are investing a record £2.4 billion in enterprise and skills, £4 billion in infrastructure and delivering the most competitive package of rates relief in the UK, including the Small Business Bonus, which to date has saved Scottish firms almost £1.5 billion.

“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.”

Liz Cameron, Chief Executive, Scottish Chambers of Commerce said: “This is great news for Scotland, but concerns remain that the construction industry continues to experience falls in output, with GDP also remaining below historical growth trends. 

“The upcoming Programme for Government presents a critical opportunity for the Scottish Government to invest in our national infrastructure, in order to jumpstart our construction sector and provide the foundation for increased growth rates for the entire economy. 

“We look forward to the Scottish Government presenting an ambitious programme, in partnership with the private sector, to boost Scotland’s growth.”

However, the Scottish Liberal Democrats warned against being too excited about the figures.

Lib Dem economy spokesperson Carolyn Caddick said: "Derek MacKay is getting rather overexcited over growth of just 1.3 per cent in a year, while Scotland's productivity continues to lag behind.

"What the Scottish economy needs is a transformative investment in the services that allow everyone to make the most of their talents, like education and mental health. 

"That would do far more to build a highly skilled, high wage society than a finance minister who leaves millions of pounds sat in government bank accounts waiting to be spent on another independence campaign."

by Jenni Davidson

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