Last week, we obtained the first major official economic data on the performance of the UK economy since June’s EU referendum.
The figures surprised most economists. The consensus forecast was for growth of around 0.3%, or less than half that in the 2nd quarter of 2016 (+0.7%), but the figure came in at 0.5%.
With so much speculation about the impact of Brexit in recent months, what do the figures tell us about the health of the UK economy, its likely direction in the months ahead, and the implications for Scotland?Continue reading
The dramatic fall in wages following the recession of 2008-9 has been well documented. The median weekly real wages of full-time workers in Scotland fell by 5% between 2008 and 2012, and have been increasing at only a sluggish rate since 2013.
Wages are clearly an important measure of living standards, accounting for three quarters of the total income of Scottish working age households.
Wage growth is also a key driver of income tax revenues, and with income tax revenues being almost wholly devolved to the Scottish Parliament in April 2017, Scottish wage growth will become a key indicator of the Scottish Government’s fiscal position.
The ONS yesterday published the latest results from its Annual Survey of Hours and Earnings (ASHE). ASHE is the most comprehensive survey of employee pay, based on a one per cent sample of all employees in the UK. It is based on earnings measured in April of each year, with the latest data now including 2016.
Grant Allan, Stuart McIntyre, Graeme Roy, Fraser of Allander Institute, Department of Economics, University of Strathclyde
On Wednesday we will get the latest official data on GDP in Scotland. This will cover the period until the end of Q2 2016.
Once again, in advance of this publication, we offer our prediction of what that estimate might be, and crucially what it will tell us about the Scottish economy.
The first – and most obvious – point to note is that Wednesday’s data will cover the period up to the end of June. We won’t have official data on how Scotland’s economy has fared since the EU referendum until January 2017.
Grant Allan & Stuart McIntyre, Fraser of Allander Institute, Department of Economics, University of Strathclyde
This post also appears on our Nowcasting blog: www.nowcastingscotland.com
Slightly later than usual, we are releasing the latest results from our Nowcasting of the Scottish economy. These results relate to Q2 and Q3 of 2016. Official estimate for 2016 Q2 will be released next week, and we will preview these in more detail early next week.
In the meantime, the results from our model are as follows:
– Our nowcast for GVA growth in 2016 Q2 is 0.31% which, at an annual rate, is 1.24%. This is slightly up on our last nowcast
– Our nowcast for GVA growth in 2016 Q3 is 0.38% which, at an annual rate, is 1.54%. This is also up slightly from the last nowcast.
Given that this is the final nowcast for Q2 which we will release, it is perhaps worth reviewing the 6 nowcasts that we have for this quarter, these are as follows:
What should be clear from these results is that as soon as our model incorporated data which related to Q2 itself (the 4th nowcast), the nowcast estimate dropped significantly.
These model results suggest growth in Q2 of around 0.3%. Given that, as we have already said elsewhere, the closure of the Longannet coal fired power station at the end of Q1 is likely to knock anything up to 0.4% off of GDP, it is likely that the Scottish economy contracted in Q2. This is a ‘levels’ adjustment, and our results suggest that the Scottish economy otherwise grew in Q2, albeit rather slowly.