Scottish GDP fell from the three months to May, however positives remain for the economy

Kevin Brown, savings specialist at Scottish Friendly, comments on this morning’s Scottish GDP figures: “There is clear reason for concern in the Scottish economy as GDP lags the wider UK, -0.2% vs -0.1%. Although marginal, it emphasises the difficult situation Scottish households are facing.

“The key drag on the economy north of the border came from manufacturing in May, which fell 0.4%. In its notes the Scottish Chief Economist Directorate commented that the cessation of oil refining in Grangemouth had a substantial impact on this figure and therefore the overall number.

“While this is a highly sensitive issue, for the economy and especially families affected, there is potential to find some broader positivity. As this is a single, large and one-off incident it is likely this may skew the GDP numbers to appear worse than might be more broadly apparent in the economy.

“No one wishes to see the loss of a key industrial pillar but hope should be placed on other sectors showing signs of buoyancy. Indeed, the biggest counter-effect to the closure of Grangemouth in May was Professional, Scientifical and Technical services, which contributed 0.2% to GDP.

“Looking ahead, there is an increasing possibility that interest rates could fall in the coming months thanks to wider UK economic challenges including slowing employment and stagnant GDP. The Monetary Policy Committee makes its latest decision on Thursday 7 August.

"This is potentially positive for the economy and markets such as property, where mortgages will hopefully become more affordable. However, it is bad news for savers, especially those putting money aside for the long-term. It is important therefore to consider the alternative to cash products such as investing.”