World Economy

Fears of Recession as Scottish Economy Shrinks

Fears of Recession as Scottish Economy ShrinksFears of Recession as Scottish Economy Shrinks

The Scottish government is “out of touch” and must withdraw the threat of a second independence referendum, critics have said after figures showed the economy shrank in the last quarter of 2016.

Economic growth in Scotland fell further behind the rest of the UK last year, with GDP growing by just 0.4% compared to 1.8% across the country, Scottish News reported.

Output fell by 0.2% in the final three months of 2016, the first decline since the third quarter of 2015. The UK economy grew by 0.7% over the same period.

Finance Secretary Derek Mackay blamed the fall on “continued headwinds” including the slowdown in the North Sea oil and gas industry and the weak global economy.

“Despite these challenges, the foundations of our economy are strong with growth in 2016, unemployment falling and early signs that the situation is improving for North Sea operators,” 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.”

Professor Graeme Roy, Director of the University of Strathclyde’s Fraser of Allander Institute, said: “The GDP data released today are deeply disappointing.

“We previously warned that this was a fragile time for the Scottish economy and that a contraction in output towards the end of 2016 was entirely possible. Sadly, these fears have now been realized.

“With the Scottish economy shrinking in the final quarter of 2016, this means that the Scottish economy did not grow at all through 2016.”


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