SNP warned over tax burden as economy ‘barely in first gear’

SCOTLAND’S sluggish economy is ‘barely in first gear’ and will struggle to deliver improved living standards as high taxes hold the country back, SNP ministers were told yesterday.

Experts called for more investment and warned that wages will stagnate if ‘disappointing’ economic growth is not addressed.

Scotland’s overall growth for 2018 was 1.4 per cent – the same rate as the whole of the UK.

In the previous three years, UK growth had been higher than in Scotland.

Tracy Black, director of CBI Scotland, said: ‘While the latest statistics 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.’

GDP figures released by the Scottish Government yesterday show growth of 0.3 per cent between October and December last year. The rate for the UK was 0.2 per cent.

Economist John McLaren said: ‘Scotland’s GDP growth performance in 2018 was stronger than had been predicted and similar to that of the UK while 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 concern over a lack of dynamism in Scottish private sector services performance.’

From next month, every Scot earning over £27,000 will pay more income tax than people south of the Border.

Scottish Secretary David Mundell said he was ‘encouraged’ by the GDP figures and UK Government financial support ‘is having a big impact’. But he warned: ‘By making Scotland the highest taxed part of the UK they [the Scottish Government] risk damaging rather than growing our economy.’

Finance Secretary Derek Mackay said: ‘With eight consecutive quarters of growth and record low unemployment – down to 3.4 per cent, the lowest in the UK – Scotland’s economy continues to go from strength to strength.

‘However, the UK’s EU exit remains the biggest threat to our economic stability.’