Scotland business

Scottish economic output falls by 0.2%

Factory worker Image copyright Getty Images
Image caption Production output in Scotland fell by 0.9% in the final quarter of 2016

Scottish economic output contracted by 0.2% in the final quarter of last year, according to official figures.

The fall contrasted with growth of 0.7% for the UK as a whole.

Scottish government statisticians found output was flat in the service sector - and down in production and construction, by 0.9% and 0.8% respectively.

Scottish GDP grew by 0.4% over the calendar year - compared with growth of 1.8% for the UK as a whole.

Reacting to the figures, the Scottish government said the impact of the Brexit vote contributed to lower growth in Scotland last year.

Finance Secretary Derek Mackay said: "Before the EU referendum, the UK government told us Brexit will make us 'permanently poorer'.

"What is now quite clear is the economic reality of the Brexit vote.

"We have already seen significantly lower consumer confidence in Scotland since the vote last summer.

"Now we see that feeding through into our growth figures and all of this is before the UK actually leaves the EU."

Image caption Source: Scottish government

The Scottish Conservatives said the country was now "on the path to recession" under the SNP.

Finance spokesman Murdo Fraser said: "Nicola Sturgeon's Scottish government must take responsibility for this mess.

"She has made Scotland the highest-taxed part of the UK and created more instability and uncertainty with her threat of a second referendum.

"Now we see the real-life impact of her mismanagement.

"These figures also smash the SNP's claim that Brexit is to blame for a slowdown.

"If that was the case, why is the rest of the UK powering ahead, while Scotland comes to a standstill?"

Analysis by Douglas Fraser, BBC Scotland business/economy editor

There may be one positive that comes out of the negative number issued on Wednesday morning by the Scottish government.

With a decline of 0.2%, October-to-December output from the Scottish economy certainly grabs attention - because if there's another quarter of contraction, it's called recession.

Read more from Douglas here.

Scottish Labour's economy spokeswoman Jackie Baillie said the figures provided "further compelling evidence that the last thing Scotland needs is another divisive independence referendum".

She added: "With Scotland's economy flatlining and Brexit creating unprecedented levels of uncertainty, it is time the SNP government in Edinburgh started taking some responsibility for its failures and acted to address them.

"The SNP should take a second referendum off the table and get back to governing the country."

'Deeply disappointing'

Fraser of Allander Institute director Prof Graeme Roy said the latest figures were "deeply disappointing" and confirmed a more general slowdown in Scotland's economy.

He said: "With the Scottish economy shrinking in the final quarter of 2016, this means that the Scottish economy did not grow at all through 2016.

"At a time when the UK economy grew at 1.8% over the same period, this is a serious cause for concern.

"With any Brexit uncertainty affecting the UK as well, it's hard to argue that Scotland's relatively weaker performance can be explained by the outcome of the EU referendum."

He added: "While the downturn in the oil and gas sector remains part of the explanation, it is difficult to ignore the substantial declines in construction over the past year (-6%) or in manufacturing (-7.3%) - with all areas of manufacturing, not just those tied to the North Sea supply chain, shrinking during 2016."

Image copyright Getty Images
Image caption Output in Scotland's services sector was flat in the last quarter of 2016

The Scottish Chambers of Commerce called for urgent government action to restore confidence in the Scottish economy.

Chief executive Liz Cameron said: "The news that Scotland's economy is contracting at a time when the overall UK economy is growing healthily must ring alarm bells for both the Scottish and UK governments.

"While Scotland's growth has been sluggish since the fall in oil prices in 2015, the evidence now shows that no sector in the Scottish economy is experiencing growth, with production and construction falling and our service sector flatlining."

The Federation of Small Businesses described the latest growth figures as "anaemic".

Scottish policy convener Andy Willox said: "If Scotland is to avoid recession, we need to see action from governments in Edinburgh and London to boost local firms.

"Scottish government and UK government ministers need to avoid fixating on inward investment - and put real effort into developing genuinely resilient local economies."

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