Scotland business

Scottish economy escapes recession

Man welding Image copyright PA
Image caption The production sector grew by 0.9% while other areas of the economy did not do so well

Scotland's economy came close to a double dip recession last winter, according to official figures.

The latest GDP figures showed that the economy barely grew in the first three months of this year, after a sharp fall at the end of 2010.

It rose by only 0.1%, compared with the UK figure of 0.5% in the same period.

The construction sector suffered particularly badly with output falling by 3.6% while the production and service sectors both grew.

The production sector increased by 0.9% while the rise in the service sector was 0.3%.

Finance Secretary John Swinney said: "The Scottish economy returned to growth in the first quarter of this year, and since then Scotland's labour market has outperformed the UK as a whole - with lower unemployment, higher employment, and lower economic inactivity north of the border - but both the GDP and jobs figures show that there can be absolutely no grounds for complacency."

He added: "However, Scotland's recovery needs to be strengthened, and the GDP figures underline the urgent need for an economic plan B, or flexibility, from the UK government."

CBI Scotland's assistant director, David Lonsdale, said: "The decidedly modest rebound in growth in the first quarter of this year reaffirms our view that Scotland's economic recovery continues to be choppy and lacks vigour.

"Expansion in some sectors is being offset by weaker performance in others, with the contraction in construction reflecting an overhang from the appalling weather experienced this past winter."

Although the output in construction fell by 3.6%, over the year the figures showed it grew by 13.9%.

However, Michael Levack, chief executive of the Scottish Building Federation, said he was sceptical whether the figures reflected the current state of the industry and said it was very fragile.

He added: "There is still very weak activity in private housebuilding and the commercial construction sector in particular.

"Meanwhile, public budgets are being cut and building firms are being put under huge pressure as the levels of public subsidy available to fund construction of housing and other infrastructure are slashed."

The latest data includes revised GDP figures for 2010 and show the Scottish economy performed more poorly for most of the year than had originally been stated.

In the second quarter of 2010 the economy grew by 1% rather than 1.3% - in the next three months it grew by 0.4% rather than 0.5% and in the final quarter it contracted by 0.5% rather than by -0.4%.

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