Scottish Government Yearbook 1988 SCOTTISH ECONOMIC PERFORMANCE AND GOVERNMENT POLICY: A NORTH-SOUTH DIVIDE?

The recent performance of the Scottish economy has been variable. After the recession of 1979 to 1981 both the Scottish and UK economies exhibited positive growth, with the index of industrial production and construction rising by 8.7% and 11.8%, respectively, to the end of 1985. However, in 1986 the relative performance of the Scottish economy deteriorated. The index fell 3% below that achieved in 1985 while in the UK the same industries managed to increase their output by 1.8% over the year. The principal reason for the reversal in Scotland's economic fortunes lay in the sharp fall in the price of oil during late 1985 and early 1986. The collapse of the oil price had obvious consequences for the UK oil supply industry which being largely located in Scotland inevitably affected Scotland more than the rest of the UK. As output and employment fell so the Scottish unemployment rate eventually began to rise at a time when unemployment in the UK was beginning to fall, reflecting the strong growth in consumer spending and improved export performance as sterling depreciated significantly against the D-Mark during 1986.