‘The wider strains from the squeeze on spending power were evident’

Comment Stephen Boyle

So there it is. Scotland is not in recession. Gross domestic product – the value of everything we produce – increased by 0.8 per cent in the first three months of this year. That compares with a fall of 0.2 per cent in the final quarter of 2016. It was the fastest growth since late 2014 and compares with 0.2 per cent in the UK during the same period.

Manufacturing led the way expanding by 4.3 per cent, the fastest rate since these data were first published in 1998 and bucking two years of decline. Much of that boost came from “Refined Petroleum, Chemical & Pharmaceutical Products”.

It grew by more than 12 per cent. This sector accounts for 1 per cent of the economy but delivered more than 20 per cent of growth. Manufacturing is prone to larger swings in output than is services in part because the opening or closure of major plants can have a significant impact on production. That likely explains part of this sharp increase.

The dominant services sector, which accounts for £3 of every £4 we earn, grew more modestly, by 0.3 per cent. The wider strains from the squeeze on spending power resulting from higher inflation and weak wage growth were evident in the 0.8 per cent contraction in retail and wholesale activity.

This is a welcome turn in performance after a poor 2016. It is welcome not least because instead of focusing on the narrow, short-term question of whether we are ‘in recession’ we can raise our sights to the bigger, more important task: boosting growth so that our incomes move closer to the world’s best performers.” ● Stephen Boyle is chief economist at RBS