Construction: Economic bright spot

The Scottish economy is continuing to lag behind the rest of the UK when it comes to economic growth, the latest data shows.

Provisional figures published by the Office for National Statistics showed that gross domestic product north of the border rose by 1.6 per cent over the year to the first quarter of 2004.

The Scottish economy grew by just 0.2 per cent in the first quarter of this year, the ONS added.

While the figures are not strictly comparable with the rest of the UK due to variations in the calculations used, UK GDP was up by 2.3 per cent over the year to 2004 Q1 and by 0.6 per cent over the latest quarter.

The service sector continued to provide much of the growth, the data suggested.

In the 12 months to the first quarter of 2004, annual output in the Scottish service sector grew by 2.0 per cent, compared with a 1.5 per cent drop in the production sector.

There was also a boost from an eight per cent rise in construction.

That contrasted with UK-wide growth in services of 2.8 per cent, a 0.1 per cent drop in production and 6.6 per cent growth in construction.

Following publication of the figures, the SNP said the slow growth was prompting a sense of insecurity among Scots.

"Whilst there are some positive aspects in this new data, it is clear that Scotland is only growing at exactly the same 1.6 percent that has been our average for more than 30 years," said shadow enterprise minister Jim Mather.

"The rest of the UK, meanwhile, is growing faster than its 30 year average and London and the South East are doubtless doing very much better than that.

"This economic underperformance is the key reason why people in Scotland are less satisfied with their lot than their neighbours, friends and relations in the South.

"It is our lower growth that causes our lower average incomes, poorer health, lower life expectancy and population decline. It is little wonder we’re not happy."

But Scottish enterprise minister Jim Wallace said he was pleased that the economy was continuing to grow.

"The service sector continues to be the main driver of growth," he said.

"The performance of the manufacturing sector still indicates that over the year the sector was suffering from difficult trading conditions during a sustained period of global restructuring.

"However, we are particularly encouraged that the latest data indicate that the sector may be returning to growth, with a 0.8 per cent increase in quarter one of this year.

"The prospects for the economy are positive, with survey evidence for 2004 Q2 showing that the economy is performing strongly, and independent forecasters are predicting above trend growth this year and next."