Scotland’s GDP fell by 0.2% in May but service sector grew, estimates show

Scotland’s GDP reduced by 0.4% in May, according to Scottish Government estimates released on Wednesday.

The latest figure continues a downward trend in onshore output for Scotland, with a 0.5% drop recorded in April and 0.3% down in March.

In the three months to May, GDP is estimated to have fallen by 0.4%, representing a “sharp reduction in growth in the second quarter of the year so far”, according to a Scottish Government report.

The main driver of the downward trend in May was the electricity and gas supply sector, which contributed -0.3% to GDP during the month; with the wholesale, retail and motor trades and accommodation and food services also seeing a downturn.

Meanwhile, the overall services sector, which makes up around three quarters of Scotland’s economy, grew by 0.1% after falling by 0.4% in April, a figure welcomed by Wellbeing Economy Secretary Neil Gray.

Mr Gray said: “Although GDP fell in May, it is encouraging to see a return to growth for the services sector, which is the largest part of the economy.

“It is likely that the extra bank holiday for the King’s coronation had a one-off effect which reduced output during the month, while the largest negative contribution to growth came from the volatile electricity generation sector.

“Despite the challenging backdrop of the ongoing cost crisis, Brexit and Covid, the Scottish economy has continued to make positive progress in comparison to the UK as a whole.

“Since 2007, GDP per person has grown by 9% in Scotland, compared to 5% in the UK, while between 2008 and 2022 productivity has grown at an average annual rate of 1% per year, compared to the UK average of 0.5%.

“We are committed to working in partnership with the business community to identify further measures that address increased costs and economic disruption and, through the New Deal for Business Group, support our contribution to building a wellbeing economy, where business and trade can thrive while caring for people and planet.”

Scottish Secretary Alister Jack said: “We are still facing economic headwinds – and an extra bank holiday had an impact on growth in May – but despite that, the economy has still broadly performed more strongly than expected in recent months, aided by resilience in the job market and falling global energy prices.

“While inflation is falling and stands at its lowest level since last March, we aren’t complacent and know that high prices are still a huge worry for families.

“That’s why we’re sticking to our plan to halve inflation this year, as well as reducing debt and growing the economy.

“We’re also providing vital financial support for businesses and families and, by 2024, we will have spent £7 billion helping to ease the burden of energy bills in Scotland including £2.1 billion in targeted cost-of-living payments.

“We’re also boosting trade and encouraging investment with more than £2.2 billion ploughed directly into promoting prosperity in Scotland which will benefit the whole of the UK.”