A summary of today’s economic commentary

Today – in partnership with Deloitte – we published our latest Economic Commentary.

This blog summarises the contents and key message of the report.

Alongside the usual commentary on the Scottish economy there are some interesting articles from:

  • David Eiser on the links between economic growth and income tax revenues;
  • Grant Allan on what the latest FAI/AGCC oil and gas survey is telling us about the transition to low carbon energy systems in Scotland;
  • Jennifer Turnbull and Kenny Richmond on Scotland’s recent innovation performance; and,
  • A look by Viktoria Bachtler at Scotland’s recent performance in terms of high growth companies.

Here we summarise some of the key conclusions from our outlook section. Continue reading “A summary of today’s economic commentary”

Will slower economic growth in Scotland necessarily mean slower growth in income tax revenues?

David Eiser, Fraser of Allander Institute

The slowdown in Scotland’s rate of economic growth relative to the UK has been well documented. Whilst growth in UK GDP per head has been weak, growing at just 2.3% between Q1 2015 and Q2 2017, Scottish growth has been weaker still, with per capita GDP growing just 0.57%, over the same period (Chart 1).

Revenues from non-savings, non-dividend (NSND) income tax now form part of the Scottish budget. Under the Fiscal Framework, the Scottish budget will be better off than it would have been without tax devolution, if revenues per capita grow more quickly in Scotland than they do in the rest of the UK (rUK). Conversely, slower growth will translate into a smaller Scottish budget.

A critical question therefore is what slower growth in GDP per capita – in Scotland relative to rUK – might mean for the growth of income tax revenues per capita in Scotland relative to rUK. Does slower growth in GDP per capita necessarily mean slower growth in income tax revenues? How strong is the relationship and what factors might influence it? Continue reading “Will slower economic growth in Scotland necessarily mean slower growth in income tax revenues?”

December nowcasts of the Scottish economy

Grant Allan & Stuart McIntyre
Fraser of Allander Institute, University of Strathclyde

At the start of a big week of news with the Scottish Budget and the first forecasts by the Scottish Fiscal Commission, we’ve run our nowcasting model with the latest official and survey data to estimate current rates of growth in Scotland.

Our model suggest that the disappointing – and well below trend – levels of economic activity experienced over the past couple of years appears to be continuing.

Continue reading “December nowcasts of the Scottish economy”

Progress: but progress to what?

Professor Ian Wooton, Department of Economics & Fraser of Allander Institute, University of Strathclyde

Today we have had the first demonstrable progress in the Brexit negotiations with the deal on Stage 1 of the process for the UK leaving the EU.

The deal covers key issues such as the financial terms of the UK’s exit, the status of EU citizens in the UK (and UK citizens living in the EU), and the border-issue between Northern Ireland and the Republic of Ireland.

What can we unpick from today’s deal in terms of what the future trading relationship might look like between the UK and the EU?

Continue reading “Progress: but progress to what?”