Company Updates

Scotland's economy has grown by 0.3% in May, according to latest figures

Name: MHA
Price range: $

August 2nd 2024

MHA’s partners in Scotland have given their reaction to news that the country’s economy is estimated to have grown by 0.3%, according to latest figures.

The Scottish Government statistics for May showed that onshore gross domestic product (GDP) rose again following a growth of 0.2% in April.

The figures show:

Growth was evident in the retail, wholesale and motor trades, which contributed 0.2 percentage points to overall growth.
Output in the services sector in Scotland is estimated to have grown 0.6% in May, with growth in seven of the 17 sub-sectors.
The production sector contracted by 2.2% in May, while construction output grew by 1.9%.
The positive contributions were partly offset by the falling output in electricity and gas supply and manufacturing.

Euan Fernie, partner at MHA’s Edinburgh office, said it was crucial to remember these figures show the position pre-election. He said:

“Albeit we have seen a drop in interest rates, ongoing uncertainty is a factor holding back investment at the current time, especially in construction.

“Uncertainty over future increases to capital gains tax and inheritance tax may hamper the ability of Owner Managed Businesses, who make up a large part of the Scottish business community, to invest in the future, which could restrict growth.

“Increasing the number of new houses to be built may be affected by any rise in CGT, as the supply of land for building may not be available if the tax cost of selling that land increases significantly. Growth in the house building sector may be affected therefore by the tax strategy to come.”

Mark Brown, partner in MHA’s Aberdeen office, said:

“I note a 1.9% growth in the construction sector, and we have seen this with our construction clients who are all very busy presently in what is a very cyclical business sector.

“For the energy sector, falling oil & gas output (record lows) have been reported in the press very recently (more energy has been imported, particularly from Norway), with a number of larger operators seeking to sell some of their UK North Sea assets. This emphasises the importance of renewables to fill the shortfall.”

Mark also highlighted the constraints to further growth: