FAI Commentary on GERS, 2015-16

David Eiser,  Stuart McIntyre & Graeme Roy
Fraser of Allander Institute, Department of Economics, University of Strathclyde

Today’s release of Government Expenditure and Revenue Statistics (GERS) is likely to re-ignite the constitutional debate in Scotland; sadly, not in the healthiest or most informed way.

Aside from the usual debate, today’s statistics contain some interesting facts about the upcoming devolution of tax powers to the Scottish Parliament.

Usually this constitutional war of words takes place only once a year, but this year, the GERS figures for 2015-16 have been brought forward from their planned publication in March 2017 to today.

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August 24, 2016

Comment on Brexit impact on Scotland report

FAI response to the analysis by the Scottish Government on the impact of Brexit in Scotland

Today the Scottish Government published analysis of the possible long-term impact of the decision to leave the European Union on the Scottish economy. The headline figures are substantial – a potential loss of £11.2 billion to the overall economy and £3.7 billion to the Scottish public finances.

But what does this analysis actually tell us that is new? To be honest, not very much.

The study summarises the consensus amongst academics and independent institutions of the possible long-term impact of Brexit on the UK economy and then simply – and rather crudely – applies these potential losses to Scottish GDP.

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August 23, 2016

FAI comment on today’s labour market statistics

Today’s employment figures are a relatively bright spot for Scotland in the midst of a raft of poor economic news over recent weeks.

Unemployment fell by 26 thousand over the second quarter of 2016 whilst employment rose by 51 thousand. The boost to employment was further fueled by a drop in inactivity as more people re-entered the labour market.

Scotland witnessed the sharpest improvement in its unemployment rate over the quarter – a fall of 1.0 percentage points – of any English region or nation of the UK. Unemployment was down 12 thousand over the year, although the rate of improvement was lower than for the UK as a whole.

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August 17, 2016

FM’s economy announcement – some comments

Today the First Minister announced welcome measures to try to stimulate the Scottish economy in the aftermath of the Brexit vote.

The major element announced today is a package of £100m to be spent on capital projects this financial year – as we called for in our Special Issue Fraser Economic Commentary published two weeks ago.

There is also wider support to Scottish business to help deal with the increase in uncertainty post-referendum.

Forty percent of respondents to our post-Brexit survey of Scottish businesses reported that the referendum result was likely to have a negative impact on their own investment plans. Today’s announcement of additional public investment will help counteract this, albeit at the margin.

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August 10, 2016

Brexit and Scotland’s Economy: Insights from the July Business Surveys

Paul Smith is a senior economist at IHS Markit, where he helps to oversee the production of business survey data for over 30 countries. His research interests include nowcasting and the role that new sources of information (particularly so-called ‘big data’) can play in helping to understand current economic conditions.

In the run-up to June’s EU Referendum, there was considerable, and at times colourful, debate on the various long-term impacts, both economically and politically, for the UK should there be a majority voting to leave the EU.

However, when it came to thinking about the short-term those on the remain side pointed to what seemed a near universal consensus amongst economists: a vote to leave would trigger some rather nasty short-term impacts, mainly in the form of a weaker pound, a deterioration in financial conditions, and deterred investment emanating from the uncertainty over what the future terms of trade with Europe (and the rest of the world) would look like. The chances of recession or a period of protracted sub-par economic growth would subsequently be raised markedly.

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August 8, 2016