Scotland business

Scotland's economy grows by 0.5%

Man welding
Image caption Manufacturing recorded growth of almost 1% during the third quarter of last year

Scotland's economy grew by 0.5% during the third quarter of 2011, according to new official figures.

The National Statistics Publication for Scotland suggested Gross Domestic Product grew year-on-year by 0.9%.

The services sector recorded growth of 0.9% in the third quarter, while construction shrunk by 1.2%. Production contracted slightly, while manufacturing grew by 0.9%.

Over the same period, the UK economy also grew by 0.5%.

Year-on-year, output in the services sector in Scotland grew by 0.3%, while the production sector expanded by 1.7%.

Exports growth

Meanwhile, separate official figures suggested Scottish manufactured export sales grew by 0.2% in real terms during the third quarter.

The Index of Manufactured Exports showed the largest contribution to growth came from the drink sector, which saw export sales rise by 3%.

There was also growth in the metal products, other manufacturing and mechanical engineering sectors, which was offset by falls in the chemicals and electrical and electronic engineering sectors.

Finance Secretary John Swinney said: "The Office for Budget Responsibility expects UK growth to have been negative in the last quarter of 2011, and basically flat through the first half of 2012, which is why the UK government urgently needs to bring forward capital investment to support growth and jobs.

"We cannot allow the recovery we are building in Scotland to be blown off course by the UK government's ill-judged economic policy."

'Plan for growth'

Scottish Labour said Scotland needed its economy "firing on all cylinders".

Finance spokesman Ken Macintosh commented: "We need a plan for growth in Scotland and it is time that ministers took responsibility for the economic situation and focused on getting Scotland growing again.

"The first step is for the Scottish government to bring forward a budget for jobs so we can kickstart growth, get the investment we need, and make Scotland the best country in Europe to do business in."

The Scottish Building Federation said there should be no doubt about the scale of the challenge the construction industry continued to face.

Chief executive Michael Levack said: "Continued difficult trading conditions for the industry in the third quarter of 2011 means we have now witnessed a full year of economic output figures where the Scottish construction sector has been on a consistent downward path.

"Looking at the corresponding employment statistics, this translates to the loss of 30,000 construction jobs - or more than 15% of the workforce - between September 2010 and September 2011."

He added ministers at Westminster and Holyrood should look again at spending priorities in favour of greater capital investment, push through reforms to planning and procurement systems and bolster support for apprenticeships and skills development in the industry.

'Eurozone uncertainty'

The Scottish Chambers of Commerce (SCC) reacted cautiously to the GDP figures.

SCC chief executive Liz Cameron said: "The news that the Scottish economy grew by 0.5% in the third quarter of 2011 puts us roughly in line with the overall UK trend but the historic nature of this data means that we do not yet know the full effects that Eurozone uncertainty has had on our economy.

"The worst of the Eurozone crisis occurred in the final quarter of 2011 and our own survey data suggests that this proved to be a very difficult time for business across a number of industry sectors."

She added: "The good news is that this growth figure reveals that the Scottish economy remains geared for strong expansion.

"Our difficulty will be in negotiating the remainder of this year successfully before returning to a period of strong growth.

"Unfortunately the external factors affecting our current growth potential are largely outwith our direct control."

CBI Scotland director Iain McMillan said the latest quarterly growth figure was encouraging but expressed concern that production and construction had both eased back.

He added: "A far bolder approach to making savings is required, in order to release monies for further investment in infrastructure, planning and support for exporters, and so that the two business tax rises - on retailers and firms with empty premises - can be scrapped.

"The devolved administration should be doing everything possible to make it easier and more attractive for businesses to invest and create jobs in Scotland, not more expensive."

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