Construction Powers Scottish Economy to Four Year High

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Scotland’s economy grew by 1.3 per cent in the second quarter of 2010, figures published today show – the highest Scottish growth rate since the second quarter of 2006 and higher that comparable GDP in the UK which grew by 1.2 per cent over the same period.

The Scottish construction sector rose by 10.4 per cent over the quarter, and there was an increase of 2.5 per cent in the production sector – both outperforming the UK as a whole.

Commenting on Gross Domestic Product (GDP), Q2 2010, Finance Secretary John Swinney said:

“After a shorter and shallower recession than the UK as a whole, today’s second quarter Scottish growth rate – the highest since the second quarter of 2006 – is a strong sign of recovery, built in Scotland and led largely by the construction sector and our capital spending programme. We cannot have Scotland’s recovery choked off by irresponsible cuts from Westminster.

“The strong growth in the construction sector in both Q1 and Q2 of 2010 is evidence that we were absolutely right to take decisive and comprehensive action through our Economic Recovery Plan, stimulating investment by bringing forward capital projects and delivering an infrastructure programme worth 3.3 billion pounds in 2010/11 – providing much needed support for construction and employment.

“Today’s 1.3 per cent Scottish growth – higher than UK-wide growth – is a welcome and positive step in the right direction, but this recovery is under real threat from UK Government cuts that are too fast and too deep, and targeted at capital spending.

“The previous UK Government’s plans for a massive real terms capital spending cut of 40 per cent between 2009-10 and 2014-15 – projections later confirmed by the new UK Government in June – exposes the scale of the cuts we expect to be visited on Scotland by Westminster.

“These cuts highlight the need for Scotland to secure economic and financial powers to grow the economy and boost revenues, building on today’s encouraging GDP figures, in order to invest in our public services. Our immediate priority going forward will be to set a Scottish budget focused on protecting frontline services and doing everything we can to sustain Scotland’s recovery in the teeth of savage UK cuts.”

In an interview on Radio Scotland First Minister Alex Salmond also welcomed the news and rebutted claims by the interviewer that the growth was down to public spending.

Mr Salmond said:
“It’s the kind of growth we would like to see in the Scottish economy, what we’ve seen over the last quarter is a 26% rise in public investment and a 16% rise in private sector investment in Scotland leading to a 1.3% increase in the economy over the quarter”

Mr Salmond described the growth figures as a “very, very strong economic performance” that could be “blown of course” by Westminster cuts.  The First Minister highlighted the social housing schemes as examples of how to re-energise the economy and also hailed the recent excellent news on exports, engineering and production industry.

Subsidy Junkie
Answering claims from the interviewer that the Scottish economy could become a “subsidy junkie” Mr Salmond explained that public spending had not caused the financial crisis or the huge deficit and that whilst public spending restraint was indeed one way to tackle the problem, Mr Salmond argued that ‘to devastate capital spending’ would only make the situation worse.

Mr Salmond’s interview can be heard here: