Scots economy to fall behind the UK

NICOLA Sturgeon was urged to use extra funding to encourage growth after it emerged Scotland’s economy will lag behind the UK.

The Office for Budget Responsibility (OBR) predicted the UK’s economy will grow by 2 per cent next year. A separate forecast showed Scotland’s will rise by only 1.3 per cent.

Chancellor Philip Hammond revealed the country’s Gross Domestic Product (GDP) was still on target to reach the prediction he gave in his Autumn statement last year.

He said that given the strength of the UK economy in recent months, the OBR had upgraded its forecast for growth from 1.4 per cent to 2 per cent.

This is despite fears raised by the OBR that growth would slow following the Brexit vote.

And it means that Scotland will fall further behind with experts forecasting GDP will rise by only 1.3 per cent in 2017-18.

Last night, Mr Hammond urged the First Minister to use £350million of extra funding for the Scottish Government to boost the economy.

A report by the Fraser of Allander Institute, which gives independent analysis of the Scottish economy, said that while the economy will grow, it will be slower than the UK.

Revealing the financial forecast to MPs, Mr Hammond said the economy would reach a targeted growth of 2 per cent by 2021.

This will be achieved by a 2 per cent rise in GDP this year followed by a slowing of growth before it rises again.

Boosted by the brighter outlook for the coming year, Mr Hammond used his Budget statement to hail ‘an economy that has continued to confound

the commentators with robust growth’.

He said: ‘Last year, the British economy grew faster than the United States, faster than Japan, faster than France.

‘Indeed among the major advanced economies, Britain’s growth in 2016 was second only to Germany.’

Mr Hammond urged the Scottish Government to use its cash windfall and ‘take further steps to strengthen Scotland’s economy’.

His call was backed by the Scottish Chambers of Commerce.

Chief executive Liz Cameron said: ‘From a business perspective, there were both positives and negatives but the Scottish Government has a major opportunity to put the £350million additional funding to good use in growing the Scottish economy.’

Brexit supporters said upgrades to the economic forecasts showed the OBR is ‘finally catching up with the realities of our prospects’ following the EU referendum.

But the watchdog came under fire once again after warning that trade will suffer a decade-long slowdown due to Brexit.

The OBR doubled its forecasts for growth in the first quarter of 201 having predicted expansion of only 0.3 per cent in November.