Scottish economy is lagging behind the rest of the UK’s

SCOTLAND’S private sector has been growing at half the rate of the UK’s since the economic crash of 2008.

A report by one of the country’s most respected economists has highlighted that Scotland is lagging behind the UK.

The paper by John McLaren, a former economist at the Treasury who is Honorary Professor of Public Policy at Glasgow University’s Business School, estimates the ‘active economy’ of Scotland – which includes most elements of the private sector but strips out public services – has increased by only 6.6 per cent since 2008, compared to 12 per cent across the UK.

It has only grown marginally since the start of last year, compared to a growth of 4 per cent across the UK.

Professor McLaren said the years of constitutional uncertainty Scotland has faced may be a reason for its economy lagging behind the UK’s.

He called on the Scottish Government to accept the problems in the economy and start trying to find solutions.

The report cites the EU referendum as one of the factors to have slowed growth across the UK.

Professor McLaren believes doubts about independence in the run-up to the 2014 referendum – and further uncertainty about whether there will be another poll – could have caused even more damage.

He said: ‘Constitutional uncertainty could have affected the UK in relation to Brexit but, you could argue, it went back further to the independence referendum in Scotland, so there has been constitutional uncertainty for a lot longer in Scotland.’

He also called on Scottish ministers to recognise the scale of the problem, saying: ‘If this was the position at a UK level, it would be being discussed at the Bank of England and there would be much more worry about how to change the fiscal conditions. Questions would be being asked of the Bank of England and the Chancellor as to how to face up to this perilous situation.’

The paper looks at Scottish and UK GDP but strips out the impact of ‘difficult to measure’ elements such as public services and financial services.

The report says: ‘With negative influences from falling construction, the North Sea slowdown and Brexit worries likely to affect Scottish output in the short to medium term, the prospect of continuing slow-to-no growth remains high.’ A Scottish Government spokesman said: ‘Any measure that excludes significant parts of the economy will not give a useful measure of economic growth.

‘The Scottish Government’s GDP figures cover the whole of the Scottish economy and are produced in line with international standards.

‘The latest figures show Scotland grew by 2.1 per cent in 2015.’

‘Constitutional uncertainty’