Theresa May attacks SNP record as Scottish economy grows at half UK rate

Theresa May has savaged Nicola Sturgeon’s economic record after it emerged Scottish growth has almost flat-lined and is half the UK rate.

The Prime Minister highlighted new statistics showing the Scottish economy grew by only 0.2 per cent in the third quarter of 2017 compared to a 0.4 per cent increase recorded across the UK as a whole.

Scottish growth over the previous year was 0.6 per cent, barely a third of the 1.7 per cent increase across the UK. GDP per person, which shows economic growth after taking population changes into account, was flat at zero north of the Border.

Keith Brown, the SNP Economy Minister, blamed Brexit for Scotland’s dismal performance despite that being a factor across the UK.

But the Tories said Ms Sturgeon must re-think her plan to increase income tax for middle and high earners and claimed that the “growth gap” since the SNP came to power in 2007 is on course to cost the country £16.5 billion.

Business leaders said there should be a renewed focus on the economy in the Scottish Government’s 2018/19 Budget, currently being considered at Holyrood, with no additional tax increases imposed.

Their demand comes amid fears that the minority SNP administration will freeze the salary threshold for the 40p higher rate income tax band, rather than increasing it by inflation, in order to win the votes of the hard-Left Greens.

The latest GDP figures continue a trend stretching back two years of the Scottish economy growing by 0.2 per cent or less every quarter, with the only exception the first quarter of last year.

Mrs May highlighted the stark difference between the Scottish and UK figures at Prime Minister’s Questions, before arguing they demonstrated that Scots would be better off under a Tory government at Holyrood.

The Tories estimated that Scotland’s GDP would be £16.5 billion higher by 2022 if SNP ministers had succeeded in matching the UK growth rate since they came to power.

Dean Lockhart, the Shadow Finance Minister, said: “This is Nicola Sturgeon's mess but her only answer is to blame Brexit and raise taxes. Sturgeon’s policy of making Scotland the highest-taxed part of the UK will only make matters worse.”

Economist John McLaren published an analysis of the figures showing Scotland’s dominant services sector grew only 0.2 per cent in the third quarter of 2017 thanks to zero growth in the business services and finance sector.

Manufacturing grew but has fallen by 2.5 per cent in Scotland over the past two years compared to growth of more than four per cent across the entire UK.

The construction sector has continued its decline, and is down 12 per cent on its peak two years ago, but the retail and wholesale industry grew by 0.7 per cent and the production by 1.2 per cent.

David Lonsdale, director of the Scottish Retail Consortium, welcomed the increase but said the overall growth rate meant MSPs must focus on growing the economy as they consider the Scottish Budget.

He said: “In particular, with family finances facing the likelihood of higher council tax bills, it’s important consumers don’t face a further hit to their wallet or purse through further hikes in income tax rates over and above those already planned.”

Mr Brown said: “Despite the impact that continued Brexit uncertainty is having on our economy, today’s figures demonstrate the resilience of the Scottish Economy with the third consecutive quarter of positive growth.

“Although more modest than we would like, it is encouraging to see the economy grow by 0.2 per cent overall.”