Published:

FAI Publications, Scottish Economy

Despite healthy growth at the start of 2024, consumers remain pessimistic about finances

The institute’s quarterly economic commentary, which covers the latest key data on the UK and Scottish economies, is out today.

Researchers at the University of Strathclyde have updated their forecast of 2024 UK GDP growth to 0.7% – moderately stronger than last quarter, when we forecasted that 2024 would see an increase of 0.6% over 2023. Overall, however, we find that growth is likely to be suppressed across 2024, in spite of healthy growth across Q1, with 2025 to be a stronger year.

In addition to generally positive GDP growth across 2024, inflation has finally slowed to the Bank of England’s target rate, with May prices up 2% compared to 2023. The slow-down in inflation is largely due to slowing changes food and energy prices. Inflation is highest for the wealthiest income brackets, reversing the trend from last year, due largely to ongoing price increases in the hotel and restaurant sector.

Looking to the labour market for the most recent quarter, Scotland’s unemployment rates have also slowed, bringing it in line with England at 4.5%. At the same time, economic inactivity rose slights, as did the total number of workforce jobs. Both unemployment and inactivity are up over last year, but so are workforce jobs – Scotland added jobs significantly more quickly in 2024 than the UK average.

Payroll earnings in the UK have grown at a steady rate over the last year, at around 6% over previous year for the median earner and grew faster than inflation for most people in 2023. Scottish consumer sentiment has not quite caught up with this change, however – most people surveyed felt negatively about the economy and household finances.

You can view the full commentary here.

Authors

Allison is a Fellow at the Fraser of Allander Institute. She specialises in health, socioeconomic inequality and labour market dynamics.

Picture of Mairi Spowage, director of the Fraser of Allander Institute

Mairi is the Director of the Fraser of Allander Institute. Previously, she was the Deputy Chief Executive of the Scottish Fiscal Commission and the Head of National Accounts at the Scottish Government and has over a decade of experience working in different areas of statistics and analysis.