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Glasgow Uni economist says Scottish economy now showing ‘signs of distress’

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Oil_RigNew data published by the Scottish Government’s chief statistician has prompted one of the county’s leading financial experts to claim Scotland’s economy has begun to show “worrying signs of distress”.

The new official figures showed that economic growth per person in Scotland has fallen behind that of the UK as a whole.

The latest Quarterly National Accounts Scotland report showed that Scottish GDP per head of population is now 1 per cent lower than that of the UK.

Examining the figures, which summarised Scotland’s economic performance up to the third quarter of 2015, John Mclaren, honorary professor of economics at Glasgow University’s Adam Smith Business School, said Scotland’s poor growth per person compared with the rest of the UK stands in contrast to figures two years ago when the figure was 6 per cent in Scotland’s favour.

Mr Mclaren also pointed out that it was over 15 per cent in Scotland’s favour in 2008.

The data also shows that Scotland’s geographical share of North Sea revenues amounted to only £21 million in Q3, as against £2,700 million in the same quarter of 2011 and £4,300 million in 2008.

The news comes as An industry survey revealed optimism in the UK oil and gas sector sunk to a new low.

Oil and Gas UK’s latest Business Sentiment Index showed the gloomiest response from companies since the survey began in 2009.

It said “deteriorating market conditions and the scarcity of new business opportunities” continued to be major concerns for the industry.

The latest index covered the fourth quarter of last year.

With a score of -32 on a -50/+50 scale, the index remained in negative territory for the sixth quarter in a row.

The index surveys representatives from both operator and contractor companies, including smaller enterprises.

As well as oil prices, Mr McLaren highlighted Scotland’s trade performance, with the nation’s (onshore) net Trade position in Quarter 3 at -£ 4.25 billion, the highest deficit on record.

Mr McLaren said: “Scotland’s economy continues to show worrying signs of distress.

“The fall in GDP per capita to below the level of the UK is clearly connected to the ongoing decline in North Sea activity and output.

“The worsening trade position, largely with respect to the UK, is a bigger worry as it has real implications for Scottish prosperity and jobs.”

Finance secretary John Swinney acknowledged there were challenges in the oil and gas sector, but said onshore revenues had grown by nearly £ 1 billion.

Key statistics in the latest Quarterly National Accounts Scotland release were:

  • During the twelve months to September 2015, onshore Scottish Gross Domestic Product (GDP) is estimated at £142 billion in total, or £26,400 per person.

  • Including a population share of UK extra-regio (offshore) economic activity, Scottish GDP is estimated at £143 billion in total, or £26,700 per person.

  • Including a geographical share of extra-regio (offshore) activity, Scottish GDP is estimated at £153 billion in total, or £28,500 per person.

  • Over the last year, Household Final Consumption Expenditure increased by 3.4% in current prices (not adjusted for inflation) compared to the third quarter of 2014.

  • Gross Disposable Household Income increased by 2.3% compared to the third quarter of 2014, in current prices (not adjusted for inflation).

  • When spending increases more quickly than income, it indicates that households have been saving less or borrowing more during the period. This is reflected in the Household Savings Ratio, which is 5.8% in the latest quarter, down from 8.4% a year ago.

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