David Eiser, Fraser of Allander Institute
The Scottish Fiscal Commission’s forecasts for economic growth in Scotland over the next five years, published in December, raised some eyebrows. Growth in GDP per capita will average just half a percent a year over the period to 2022 according to the forecasts. This is about half the average growth rate seen during the noughties. It is also slower than the 0.7% average growth rate that the OBR is forecasting for the UK.
The latest GDP statistics for Scotland, published last week, included a downward revision to recent rates of GDP per capita growth. Prior to the revision, recent growth of Scottish GDP per capita had already been looking weak, with growth of just over half a percent between Q1 2015 and Q2 2017. But following the data revision this positioned has worsened, with GDP per capita actually shrinking fractionally over that same period, according to the revised figures. In contrast, UK GDP per capita grew 2.7% over the same period, opening up a marked gap in relative performance (see Chart).