Recession threat is lifted as Scots economy grows

Economy expands by 0.8%, but annual growth lower than UK’s

Scotland’s economy grew in the first quarter of the year as a production boom saw off the threat of recession.

Economic output increased by 0.8% in the first three months of 2017 to outstrip the UK-wide rise of 0.2%, official figures revealed. But over the year growth north of the border lagged behind the UK’s by 0.7% to 2%.

The SNP said the Scottish economy, which was thought to be on the brink of recession, “bounced back” amid a resurgent oil and gas industry.

Between January and March, the production sector expanded by 3.1% and services grew by 0.3%, according to official GDP figures published today.

The construction sector contracted by 0.7%.

Economy Secretary Keith Brown said: “While these figures are positive, we will continue to do everything possible to support Scotland’s economy, particularly amidst Brexit uncertainty.”

He said growth was driven by output increases in industries linked to the North Sea, as well as in manufacturing.

There were widespread fears the Scots economy would slump into recession after previous figures, which covered the last quarter of 2016, revealed that economic output north of the border had shrunk by 0.2%.

Scottish secretary David Mundell said the figures were “very encouraging”.

“The Scottish economy is returning to growth and I am pleased to see that the manufacturing sector making the most of export opportunities,” he added.

“But, over the year, Scotland has lagged behind the UK as a whole, so there is still a lot of work to do.”

A Scotland Office spokeswoman said the UK Government had provided £2.3bn worth of support for the oil sector through tax measures.

Scottish Labour’s economy spokeswoman Jackie Baillie said: “It is a huge relief that Scotland has avoided recession, but this was a narrow escape for our fragile economy.”

And Willie Rennie, the Scottish Liberal Democrat leader, said: “The big picture is of an erratic and patchy economy.”

Liz Cameron, from Scottish Chambers of Commerce, said the figures are a “huge sigh of relief”. She added: “The most significant contributor to recovery has been the production sector and this reflects the positive signals that we have been detecting from manufacturers.”