Weakness of Scottish growth is ‘worrying trend’, leading think tank warns

THE Scottish economy’s continuing underperformance of the UK as a whole is a “worrying trend”, and manufacturing remains “especially weak”, a leading think tank has warned.

Strathclyde University’s Fraser of Allander Institute sounded the note of caution after the latest gross domestic product (GDP) data from the Scottish Government showed the economy north of the Border grew by just 0.2 per cent in the third quarter of last year.

And growth in Scotland in the second quarter of last year was revised down from an initial estimate of 0.4 per cent in October to just 0.2 per cent.

Comparing the third quarter of last year with the same period of 2015, Scottish GDP was up only 0.7 per cent. This was well adrift of a belowtrend, year-on-year rise of 2.2 per cent in GDP in the UK as a whole in the third quarter.

Economists have in recent times highlighted the drag on the broader Scottish economy from oil and gas sector weakness – driven by global influences – a factor that has also been noted by industry body Scottish Engineering.

The latest figures show Scottish manufacturing output dropped by 1.9 per cent during the third quarter of last year, and was 5.2 per cent lower than in the same period of 2015.

Meanwhile, yesterday’s figures show the Scottish construction sector, which during 2014 and 2015 had provided a significant boost to overall Scottish GDP against a backdrop of spending on major infrastructure projects, proved a drag on the economy during the third quarter. Construction output fell by 1.4 per cent quarteron-quarter in the three months to September.

The Scottish services sector grew by 0.4 per cent in the third quarter, the latest figuresshow.

Professor Graeme Roy, director of Fraser of Allander, said: “[The] economic statistics are clearly disappointing and represent the continuation of a worrying trend of the Scottish economy lagging behind the rest of the UK.

“Manufacturing remains especially weak with a decline of over five per cent over the last 12 months.”