Keep sight of bright spots amid the gloom
economic growth was boosted in the second quarter by oil and gas extraction was eye-catching.
As Mr Osborne’s “march of the makers” remained elusive, more than four years after a March 2011 Budget in which he promised it, UKmanufacturing output lamentably fell by 0.3 per cent in the second quarter.
However, broader industrial production rose by one per cent. The reason? It might have come as a surprise to some, but it was a surge in oil and gas extraction.
The Office for National Statistics cited “evidence” from the UKGovernment that Mr Osborne’s cuts in North Sea taxes in his March 2015 Budget had helped, although it seems very quick for these to have had such an effect. Whatever the case, the fact that crude prices were less weak in the three months to June than in the first quarter seems likely to have played a part in the surge in oil and gas extraction.Andthereseemedtobelessalarm in the second quarter about what might happen to crude prices next, which will also likely have helped.
Elsewhere last month, Shell signalled an appetite for further North Sea disposals.
But we can take heart from the fact that, even at current oil prices, there are still-enthusiastic buyers of North Sea assets, including Parkmead Group’s TomCross. Mr Cross enjoyed great success with his previous Dana Petroleum venture before selling it to Korea National Oil Corporation.
The oil and gas industry veteran also highlighted his appetite for exploration in the North Sea.
And Shell, while it might want to rationalise its North Sea portfolio, did reiterate its commitment to huge developments west of Shetland. Lower oil prices and its belief that these could continue for some time have done nothing to dent its enthusiasm for west of Shetland projects and we should take heart from this.
At least as encouragingly, Scottish Hydro owner SSE revealed it was taking advantage of the North Sea downturn in a “timely” move to secure future gas supplies through a near-£1 billion investment in a flagship development west of Shetland.
It is paying £565m to buy a 20 per cent stake in the Greater Laggan development from French oil giant Total. SSE has also agreed to invest a further £350m over the next three years towards the costs of bringing the four fields covered by the deal onstream. This is surely a vote of confidence in the long-term potential of the west of Shetland area.
Among other statistics, a Scottish Chambers of Commerce survey showed manufacturers north of the Border enjoying some success on the export front in the second quarter, albeit the Confederation of British Industry’s latest industrial trends report was not so upbeat.
Scottish Government data showed the country’s manufactured exports jumped by a seasonally-adjusted 2.1 per cent in the first quarter, with the drinks sector doing well.
In this month’s edition, Colin Cardwell highlights the fledgling Glasgow Distillery Company’s success in starting exports to the US. It is one of many companies all over Scotland, big and small, that are enjoying success on the export front.
Also Ron Clark highlights the continuing pull of Scotland for tourists from around the world, including tens of thousands of Japanese visitors every year. Hopefully, these international visitors will have seen some sunshine amid last month’s gloomy weather. At least they will not have had the Scottish economic statistics and corporate announcements to worry about, although, in this context too, there have thankfully been some bright spots amid the gloom.