Emerging confidence in Oil and Gas sector boosts economic outlook
However, the latest assessment by the Scottish Government's chief economist also noted that growth was below expectation in 2016
Emerging signs that confidence is returning to the oil and gas sector and a resilient labour market have helped ensure Scotland's economic outlook remains positive, a new report has found.
However, the latest assessment by the Scottish Government's chief economist also noted that growth was below expectation in 2016, while Brexit remains a “significant risk” to business and consumer confidence.
The State of the Economy report was published ahead of a debate in the Scottish Parliament on “opportunities for growth”.
It draws on a range of recent data to provide an overview of the economic outlook.
The report confirmed growth overall in Scotland during 2016 of 0.4%, which was “below trend and expectation”.
The oil and gas sector downturn continued to affect the economy last year, though there are emerging signs of confidence returning to the industry, the report found.
Meanwhile, Scotland's labour market has “remained resilient”, with unemployment below the UK figure and falling over the past year.
The report states: “Brexit continues to present a significant risk to business and consumer sentiment in Scotland with investment sensitive to changing market signals.
“It also presents the greatest source of uncertainty for the outlook particularly beyond 2018. The range of independent forecasts for 2017 suggest growth of between 0.9% and 1.3% for Scotland.
“At this level of growth, it is not unexpected to have a negative quarter as was evident in 2015 and 2016. However, as cyclical factors improve, coupled with the underlying strengths of the economy, growth should remain resilient.”
The report also draws on new analysis to compare Scotland's economic growth over the five years from 2010 to 2015 to the rest of the UK, excluding London.
Growth stands at 2.9% in Scotland for this period compared with 3.3% in the rest of the UK, however when London is excluded, the latter falls to 2.9% also.
Speaking ahead of the debate, Economy Secretary Keith Brown said:
“This report confirms that the foundations of Scotland's economy remain strong.”
Mr Brown welcomed record figures on foreign direct investment and the new analysis showing Scotland on a par with the rest of the country when London is excluded.
“That said, growth is slower than we would like to see and the UK Government's stance on Brexit continues to present a huge threat to jobs and prosperity in Scotland,” he added