Figures from the Scottish government show that last winter the economy came perilously close to a double dip recession.
The figures on gross domestic product (GDP) reveal that the economy grew by only 0.1 per cent in the first three months of 2011, following a sharp fall at the end of last year. By contrast, the UK figure grew by 0.5 per cent in the same period.
Although the production sector grew by 0.9 per cent and the service sector by 0.3 per cent, the contraction in the construction sector – where output fell by 3.6 per cent – pulled the overall position down.
According to the finance secretary John Swinney, there were no grounds for complacency. But he suggested that the Scottish economy had “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”.
The awful winter weather at the end of 2010 may partially explain why the economy across whole country contracted in the final quarter of the year. But that excuse doesn’t work for the period covered by these figures, making it hard to explain why Scotland’s growth was so much weaker than the UK's. Full-scale recession was avoided by a tiny margin.
CBI Scotland's assistant director, David Lonsdale, said that “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.”
And Andy Willox OBE, Scottish policy convenor of the Federation of Small Businesses (FSB), said: “Today’s GDP figures should focus minds at both Holyrood and Westminster.
“At Westminster, the FSB wants an effective fuel duty stabiliser that would not only help stabilise the finances of households and small businesses but that of the wider economy as well. The FSB also wants the UK government to explore the use of targeted VAT cuts in the construction and tourism sectors to drive growth.
“North of the border, small businesses need to see evidence that the Scottish economy remains the number one priority. Entrepreneurship, infrastructure, procurement, planning and business support – these are all Scottish government areas of responsibility where improvement is demanded by the Scottish small business community.”
On the state of the construction sector, Michael Levack – chief executive of the Scottish Building Federation – said that the figures “provide evidence that any recovery in the construction industry remains slow and bumpy. Up until the tail-end of last year, we’ve continued to see quarter-on-quarter growth in public sector output, but that is now firmly on a downward path as public funding cuts really start to bite.
“From a government point of view, we need an urgent review of spending priorities and the procurement process to ensure we are getting absolute best value for money and continue to deliver the type of new work the construction industry needs to sustain it through this difficult period.”
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