Analysis by economist John McLaren

The official Scottish Government response to the latest GDP figures for Scotland was that “With four consecutive quarters of positive growth in 2017, Scotland’s economy continues to show strength.”

Lets just look at how much ‘continued strength’ is being exhibited: growth of under 1 per cent in the last year; average growth of under 1 per cent a year since 2014; average growth of 1.1 per cent a year since 2009.

These figures are abject, both is historical terms and relative to the, also underperforming, UK economy. Why are things so bad?

The story goes well beyond any downturn in North Sea activity. While Scotland got through the 2008 recession relatively unscathed, its post recession revival has been dire. In contrast, even in the eight years after the mid 1970s recession (which incorporated a second recession) the Scottish economy grew faster than it has since 2009.

The problem is spread across a range of sectors. For example, even though the business sector has been the main driver of growth in Scotland, it has grown at less than half the rate seen at the UK level.

Other private service sectors have performed almost as badly. In some cases these low growth problems extend even further back, with the hospitality sector (hotels and restaurants) having seen next to no growth in almost twenty years.

One of the reasons that the Scottish Government can get away with its facile comment on the state of the economy is that so little scrutiny is brought to bear on its performance. This is a political problem, in the sense of a general lack of interest, as well as a wider one, with few think tanks and media specialists highlighting the economic issues.

If the UK economy had grown by less than 1 per cent a year for the last three years there would be uproar and possibly a new Governor at the Bank of England. In Scotland, silence reigns.

The underlying problem remains difficult to identify, partly because so little analysis has been undertaken to try and understand what is going on. What does seem likely is that the Scottish Government’s current policies will not provide the solution. This is a view shared by the Scottish Fiscal Commission who forecast GDP growth of under 1 per cent a year for the next four years.

Will this also be viewed as Scotland’s economy continuing to show strength?