THE Scottish economy’s significant outperformance of the UK as a whole came to an end in the third quarter, official figures show.
Growth north of the Border was well ahead of that UK-wide in the first half, with recovery of the North Sea sector amid firmer oil prices and the knock-on benefits of this for the broader Scottish economy cited by experts as a likely key factor.
However, figures published yesterday by the Scottish Government show gross domestic product north of the Border grew by 0.3 per cent quarter-on-quarter in the three months to September. This was adrift of the 0.6% expansion recorded in the UK as a whole.
Scottish manufacturing output dropped by 0.7% in the three months to September, having risen by 0.8% in the second quarter. Manufacturing output north of the Border had climbed by 2.5% quarter-on-quarter in the opening three months of this year.
And economist John McLaren, author of the Scottish Trends website, expressed concern about the potential impact of the sharp retreat in oil prices in recent weeks on the economy north of the Border from the current quarter. He also warned of the impact of Brexit.
In the first quarter, the overall Scottish economy grew by 0.4%, four times the 0.1% rate of expansion recorded for the UK as a whole. And GDP rose by 0.5% in Scotland during the three months to June, ahead of UK-wide growth of 0.4% over this period.
Comparing the third quarter with the same period of last year, economic output showed 1.5% growth in both Scotland and the UK as a whole.
The economy of the UK as a whole has been dragged down by the impact of the Brexit vote.
British Chambers of Commerce this week estimated that the UK would grow by just 1.2% during 2018 as a whole. This would be the UK’s weakest performance since 2009, in the wake of the global financial crisis. The UK grew by 1.7% in 2017 and by 1.8% in 2016, well adrift of a historical long-term average annual rate of expansion put by Bank of England Governor Mark Carney at about 2.75%.
Output of Scotland’s food and drink manufacturing sub-sector tumbled in the three months to September, having risen sharply in the second quarter.
Commenting on Scotland’s economy, Mr McLaren said: “The main contribution to the uptick seen in the first half of 2018 in growth came from the manufacturing sector, in particular food and drink and electrical goods. This may be due in part to a positive Brexit effect via a lower value of sterling improving exports. However, Q3 saw a fall back in manufacturing output, mainly in relation to falling food and drink output.”
He added: “In the wider economy, particularly private sector services, the recovery in the oil price and in North Sea activity is likely to have improved growth conditions so far in 2018. However, the decline in oil prices since the end of Q3 may lead to a diminution of any such positive effects;”
The Scottish GDP figures do not include the output from offshore oil and gas extraction itself. However, conditions in the North Sea have a significant impact on the north-east economy and on overall Scottish GDP.
Scotland’s construction sector output jumped by 2.7% in the three months to September, and was the main contributor to overall growth during the third quarter. The key services sector grew by 0.3% in the third quarter, having expanded by 0.5% in the preceding three months.
Scottish manufacturing output in the three months to September was up by 3.9% on the same period of last year, in spite of its third-quarter slide.
Mr McLaren said: "Scotland's relatively good economic performance in 2018 has stalled somewhat in quarter three, with much of the recent advantage gained over the UK having been lost as manufacturing fell back. With a falling oil price and an uncertain Brexit looming, prospects remain poor."
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