State of the Economy

The Scottish economy was growing in the run up to the EU referendum and unemployment has continued to fall, the latest State of the Economy report published today shows.

In the report, the Scottish Government’s Chief Economist, Dr Gary Gillespie, sets out the key trends in the Scottish economy in the first half of 2016, the emerging signals in the immediate aftermath of the EU referendum and the outlook for the coming year.

The report highlights:

• The performance of the Scottish economy improved in the second quarter of 2016 despite the on-going challenges facing the oil and gas sector, with production and services driving growth and a strengthening labour market.
• The EU referendum vote has impacted on the outlook for the Scottish and UK economy, reflecting the uncertainty triggered by the vote and the expectation that the referendum result may lead to changing investment patterns and business decisions.
• Initial economic data is holding up following the EU referendum, however business and consumer sentiments remain weak and are expected to remain highly sensitive to information relating to the UK/EU exit and negotiation process.

Cabinet Secretary for the Economy, Jobs and Fair Work, Keith Brown, said: “Today’s State of the Economy report shows that in the build-up to the EU referendum, the Scottish economy was continuing to grow, despite the on-going headwinds caused by the low oil price and weak global demand.

“Whilst the fundamentals of the Scottish economy remain strong, the EU referendum result has already started to impact on business and consumer sentiment in Scotland, reflected in the weaker outlook for the economy going forward. Scotland voted clearly to remain part of the EU and the absence of any plan at a UK level – either for Brexit, or to support the economy in the aftermath of the vote, is adding to the problem and putting at risk the progress we have made.

“That is why the Scottish Government is pursuing all options to retain our relationship with Europe, access to the single market, and all the advantages that brings. Today’s report demonstrates why this is so important, showing how our economy benefits from our trade links with the EU and the free movement of labour and capital.

“But we are also acting now to provide the immediate support our economy needs. For example, we introduced a £100m capital stimulus package, which will help to protect jobs, build on the progress already made and keep our economy moving through these challenging times and we are establishing a £500m Scottish Growth Scheme to support business expansion and exports. From today’s report, it is clear we need urgent action of an equivalent scale at a UK level, something I have consistently called for.”