Brexit and the Fiscal Settlement

Jim Cuthbert is an independent statistician and economist and former Scottish Office Chief Statistician. Working often jointly with Margaret Cuthbert, he has published a number of influential articles on Scotland’s economy and public finances. Their research can be found here –

In his talk at the Fraser of Allander Scotland’s Budget 2016 Seminar on 13th September, the Institute’s Director Graeme Roy touched on an important point about the Common Agricultural Policy (CAP), and the implications of Brexit for Scotland’s new fiscal framework signed as part of the Smith Commission. Since the point was not picked up in the discussion, it is worth expanding here. What will be argued here is that, while the CAP adjustment will indeed pose problems, it also offers an opportunity to re-open wider issues about the post-Smith fiscal settlement.

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September 27, 2016

Insight on Labour Market Statistics

Stephen Boyd is Assistant Secretary of the Scottish Trades Union Congress (STUC), with responsibility for economic and industrial policy, the environment, utilities, transport and arts and culture – see @stephenboydecon

On Wednesday the latest Fraser blog patiently explained why some caution was required when interpreting what were ostensibly very positive new labour market statistics: the significant fall in unemployment masked rising inactivity and the big three-month increase in employment only took the 16-64 years employment rate back to where it stood a year ago.

It’s a tremendous boost to the quality of Scottish economic debate to have the revamped Fraser of Allander Institute now responding quickly and authoritatively to new data releases.

Further to the Fraser researchers’ analysis, I think the latest statistics throw up another three issues worthy of comment.

First, it is striking that women account for the entire rise in inactivity over the year. The surge in women’s inactivity over the last year is explained by both falling unemployment (-21,000) and employment (-15,000). Men have seen falling unemployment (-13,000) and inactivity (-4,000) combine to produce an increase in employment (15,000).

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September 16, 2016

Insight on August 2016 PMI measures

Paul Smith is Director and Senior Economist at IHSMarkit, 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.

Latest data from the Purchasing Managers’ Indices (PMI) surveys indicated that the Scottish economy broadly underperformed the rest of the UK during August.

Coming in at a disappointing 49.1, fractionally down on July’s 49.2 and a five-month low, August’s Bank of Scotland PMI pointed to a second successive marginal contraction in private sector output (any reading below 50.0 points to monthly contraction).

The latest data maintains a trend seen throughout 2016 of an economy struggling to expand, and one continuing to lag wider UK economic output.

Indeed, the latter showed a remarkable degree of ‘bouncebackability’ in August following a partial unwinding of the immediate economic and political uncertainty created by the decision to leave the EU. The UK Composite PMI (covering the manufacturing and service sectors) moved up to a five-month peak of 53.6, a rise of over six points from July’s Brexit induced nadir of 47.5. July aside, the UK PMI has posted consistently above the equivalent Scottish index throughout the past three years.

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September 15, 2016

Large fall in unemployment masks lower employment rate

David Eiser, Stuart McIntyre and Andrew Ross,

Media headlines will focus on the fact that today’s labour market data show that the unemployment rate in Scotland is now lower than at any point since 2008, and is lower than in the UK as a whole (4.7%, compared to 4.9% in the UK).

Looking beneath the headline unemployment numbers however, not all is entirely positive.

Whilst unemployment is lower in Scotland than in the UK as a whole, this is largely because inactivity rates are higher. (The inactive include those who are not in work and not available for work; reasons for being economically inactive can include being in full-time education, caring for others, having retired, being long-term sick, and so on). Scotland’s 16-64 economic inactivity rate, having been below that of the UK throughout most of 2013, 2014 and 2015, is now above that of the UK (22.1% v. 21.5%).Continue reading

September 14, 2016

Scotland’s Budget: 2016 in 6 charts!

Today we have published our first Scotland’s Budget report – for 2016 – at an event in Edinburgh attended by all parties and representatives from Scotland’s business, third sector and public sector communities.

Scotland’s Budget: 2016 provides an objective assessment of the outlook for Scotland’s finances and the choices, challenges and opportunities facing Scotland’s new Finance Secretary.

Not everything is known with certainty but through our publication we hope to provide a solid evidence base for a frank discussion about the priorities for Scotland, including how best to use our new tax and welfare powers.

The full report can be accessed here

Today’s report sets the context for debate. And it will be lively! The coming months and years may turn out to be the most important period of economic and fiscal policy debate Scotland has known.

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September 13, 2016