GROWTH in Scotland has fallen, prompting fears that the country is on the brink of a recession.
Figures released yesterday by Scotland’s Chief Statistician revealed that domestic product (GDP) contracted by 0.3% in the second quarter.
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Finance Secretary Derek Mackay blamed Brexit for the shrinkage and warned that the uncertainty could easily lead to growth in the next quarter falling too, pushing the country into a recession.
Brexiteer Tory and Scottish Secretary Alister Jack blamed the Scottish Government.
There had been relatively robust growth in the first quarter in 2019, partly down to a hike in manufacturing sector output as firms stockpiled and moved to complete orders prior to the original March Brexit deadline.
But that output was effectively reversed after Brussels granted the UK another Brexit extension.
Mackay said: “Given the repeated warnings from business organisations and the contraction across the UK in the same quarter, it is unsurprising, but deeply frustrating, that we are now seeing the Brexit impact on the Scottish economy.
“The responsibility for this contraction lies entirely with the UK Government.
“There can now be no doubt that any form of Brexit will damage our economy and a No-Deal Brexit would be disastrous for Scotland and could push the country into recession.
“Scotland did not vote for Brexit, but our economy is paying the price for it and we are likely to see continued volatility as businesses try to prepare for the looming October Brexit deadline and the increasing thread of a No-Deal exit.
“We are already taking steps to protect jobs and our economy from Brexit but not every impact can be mitigated. We will continue to stand firm against efforts to take us out of the EU against our will.”
GDP contracted by 0.3% during the second quarter of 2019, covering the period April to June. However, over the year, compared to the second quarter of 2018, the economy has grown by 0.7%.
During the second quarter output in the construction sector contracted by 2.2%, output in production contracted by 1.1% and output in the services sector grew by 0.1%.
Two sub-sectors of manufacturing – food and drink, pharmaceutical and related industries – account for more than half of the 0.3% contraction of this quarter.
Jack said he was concerned by the figures: “I urge the Scottish Government to use the considerable powers at their disposal to improve the Scottish economy rather than holding it back with threats of a second independence referendum and the decision to make Scotland the most highly taxed part of the UK.”
In his analysis, Professor Graeme Roy from the Fraser of Allander Institute said Brexit uncertainty had “affected the pattern of business activity.”
He added: “In the first three months of the year we saw activity boosted by firms stockpiling supplies in the event that the UK exited the EU at the end of March.
“When this did not come to pass, and the next deadline was pushed to October 2019, we saw firms run down these stockpiles leading to lower levels of activity.”
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