Economic Growth (Forecast)

– in the Scottish Parliament on 9th January 2019.

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Photo of Liam Kerr Liam Kerr Conservative

2. To ask the Scottish Government how the Scottish Fiscal Commission’s forecast for economic growth in Scotland over the next four years compares with that for the United Kingdom as a whole. (S5O-02730)

Photo of Derek Mackay Derek Mackay Scottish National Party

The Scottish Fiscal Commission forecasts economic growth in Scotland to be faster than the Office for Budget Responsibility forecast for the UK in 2018. Comparing the forecasts, economic growth per person will be similar in Scotland and the UK over the next four years, but overall gross domestic product growth will be lower in Scotland as a result of slower population growth. That certainly underlines the importance of Scotland being able to develop a migration policy that is tailored to our needs, rather than to those of the UK Government.

Photo of Liam Kerr Liam Kerr Conservative

I thank the cabinet secretary for that answer, in which he failed to make it clear that the SFC’s forecast shows that Scottish economic growth will lag behind that of the UK as a whole for the next four years.

The Scottish National Party is always keen to blame its failings on the UK Government or Brexit—and sometimes even on the weather. Can the cabinet secretary tell us, in simple terms, how Scotland’s growth rate being lower than that of the rest of the UK can be due to anything other than the SNP?

Photo of Derek Mackay Derek Mackay Scottish National Party

It is very interesting that Liam Kerr has forgotten that in some of last year’s quarters, Scotland’s economic growth and GDP outperformed those of the United Kingdom. Surely the same logic applies: Scotland’s economic growth outperforming the UK’s is because of the SNP Government. In truth, the reality is that a large part of macroeconomic policy is still in the hands of the Westminster Government, although we would like that to be changed.

The biggest threat to the economy just now, and the main reason for the subdued figures in forecast economic growth, is Brexit uncertainty. Who has caused that? It is the Conservative Party.

We are making a lot of effort to enhance and accelerate our economic growth. We have referenced only the SFC’s and OBR’s forecasts. As a matter of fact, the SFC economic forecasts for 2018 were wrong, because Scotland has outperformed them. What is more, the SFC had to revise upwards the economic forecast for the Scottish context.

I welcome the work of economists in forecasting economic growth. We will do everything that we can to stimulate economic growth. However, the biggest threat to that right now is Brexit mismanagement at the hand of the UK Government.

Photo of Richard Lyle Richard Lyle Scottish National Party

For the record, will the cabinet secretary confirm what Scotland’s GDP growth was predicted to be over the past year and what it has been?

Photo of Derek Mackay Derek Mackay Scottish National Party

The answer to Mr Lyle’s question will add further detail to the point that I made about Scotland having already outperformed the SFC forecasts. Of course, there will be revisions and a further estimate for the final quarter, but in December 2017 the SFC forecast was that GDP would grow by 0.7 per cent in 2018. The full-year growth figure for 2018 is not yet available. However, in the first three quarters of the year, the economy has grown by 1.2 per cent, so in 2018 we have had growth that has been higher than was forecast.

Photo of Derek Mackay Derek Mackay Scottish National Party

I hear that Richard Lyle is delighted by that news. Growth for 2018 is now forecast to be 1.4 per cent, which is double the original SFC forecast.

Photo of Rhoda Grant Rhoda Grant Labour

We have much indigenous talent in Scotland that could well boost our economy, but financial assistance tends to be given to larger companies. What will the Scottish Government do to encourage and grow our talent, and to support small and medium-sized enterprises that are more likely to stay here?

Photo of Derek Mackay Derek Mackay Scottish National Party

I welcome the question and appreciate the point. We want to scale up businesses, get more businesses exporting and have more diversity in that regard. I do not think that Rhoda Grant was in any way trying to imply that we should not also rely on or encourage further migration to Scotland as a welcome addition to our economy, because population is a huge issue for economic growth.

I am directing the enterprise agencies to do even more on scaling up and supporting small and medium-sized enterprises. There are other efforts and there is the economic action plan. I take Rhoda Grant’s point on board.

Even though unemployment is at a record low of 3.7 per cent, which I had thought Labour members would welcome, we can do more on reskilling and encouraging back into the workforce people who have been removed from it. Therefore, there are efforts being made around gender and reskilling.