Brexit uncertainty impacting the economy

Following a period of sustained economic growth, Scotland’s gross domestic product (GDP) has contracted by 0.3% in the second quarter – the three months after the original EU departure date at the end of March.

This contraction follows relatively robust growth (0.6%) in the first quarter in 2019, which was supported by a notable acceleration in manufacturing sector output as firms stockpiled and moved to complete orders prior to the original Brexit deadline.

Compared to the same quarter last year, Scotland’s GDP grew by 0.7%. Since the start of 2019, growth has been in line with the UK.  

Economy Secretary Derek 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 and 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.”

Background

Full statistical publication

Contraction in sectors associated with Brexit Stockpiling:

In quarter 1, two sub-sectors of manufacturing (food and drink and pharmaceutical and related industries) accounted for more than half of total growth. Surveys attributed this to stockpiling.

This quarter the same two sectors accounted for the whole 0.3% contraction.