Scottish economic growth slows in second quarter

The construction sector grew by 3.5% in the second quarter

Scottish economic growth slowed in the second quarter of this year despite a strong performance by the construction sector, according to new figures.

Total output in the economy grew by 0.1% between April and June, compared with 0.4% in the previous quarter.

The construction sector grew by 3.5% but output in services was flat while production contracted by 0.8%, according to national statistics.

The UK economy as a whole expanded by 0.7% in the second quarter.

On an annual basis, Scottish GDP grew by 1.9%.

The Scottish economy has grown for 12 consecutive quarters and output is now 3% above its pre-recession peak.

Analysis by Douglas Fraser, Scotland business and economy editor

Something is mis-firing in the Scottish economy.

The cause is partly business confidence and poor productivity. Problems with the oil and gas sector are clearly not helping. And partly it's the difficulties facing exporters into the eurozone.

The latest figures on Gross Domestic Product look disappointing, at 0.1% growth between the first and second quarter of the year.

If it weren't for construction activity, the Scottish economy would have contracted between April and June.

Another quarter like that, and it would be a recession.

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Deputy First Minister John Swinney said: "It is positive to see further growth in the construction sector as a result of continuing strong investment and support from public spending in Scotland.

"Likewise the healthy expansion in Q2 (quarter two) of the electricity and gas supply sector is a positive story for Scotland's economy.

"Nonetheless, the figures point to challenges in some sectors as a result of several factors, including subdued demand in the oil and gas sector and a normalising of some very strong trends in recent periods.

"The annual growth rate moderated a little compared to the very strong growth seen in recent periods but remains healthy by historical standards."

Source: Scottish government statistics

Scottish Conservative enterprise spokesman Murdo Fraser said: "It is good to see the Scottish economy still growing, but disappointing to see a dip in GDP compared to the growth the wider UK has enjoyed.

"On the back of recent surveys showing low business confidence in Scotland, this is more evidence that our economy is not doing as well as it should."

Scottish Liberal Democrat leader Willie Rennie said that while the economy continued to grow across the UK, it seemed to have "almost flatlined" in Scotland under the SNP.

He added: "Instead of picking fights with Westminster, the first minister must focus on securing Scottish growth in the economy, jobs and business."

'Very concerning'

Commenting on the figures, Scottish Chambers of Commerce chief executive Liz Cameron said: "An apparent contraction in the production sector has reduced Scotland's growth rate to its lowest level for three years.

"This is very concerning, particularly when measured against the healthy UK growth rate of 0.7% over the same period.

"This should act as a wake-up call to prove that we simply cannot take the growth of our businesses and our economy for granted and that government policy, both at a UK and Scottish level, must be absolutely focused on creating an environment in which businesses can thrive."

Andy Willox, Scottish policy convener for the Federation of Small Businesses, said: "Recent evidence from our members revealed a significant dip in small business confidence.

"Today's growth figures show that there's obviously still work to do to get Scotland's economy firing on all cylinders at a national and local level."