August nowcast update!

We have updated our nowcasting model for the Scottish economy with the latest official statistics and survey data to produce new estimates of economic growth in Scotland in Q2 and Q3 of 2018.

  • Our nowcast for GVA growth in 2018 Q2 is 0.33% which, at an annual rate, is 1.34%.
  • Our first nowcast for GVA growth in 2018 Q3 is 0.39% which, at an annual rate, is 1.57%.

Relative to our last nowcast update our estimate for Q2 2018 has improved very slightly (up from 0.32%), but on balance the figures still suggest relatively weak growth.

This week, we’ll get revised official data for the Scottish economy when the next set of National Accounts are published. Summer is usually when more substantial revisions are put through the economic accounts – following publication of the latest Input-Output tables for Scotland in July each year – and these are likely to alter the pattern of past growth in Scotland. We’ll provide a short blog summarising these key changes.

All of this will be followed by – on the 19th of next month – the first set of official data covering the performance of the Scottish economy over the period March – June (Q2).

We’ll pick this issue up in more detail, as well as review the wider economic landscape, in the next Fraser Economic Commentary to be published in late September.

August 13, 2018

Brexit: the mood amongst Scottish businesses

The last month has been a tumultuous time in the Brexit negotiations following the publication of the Prime Minister’s Chequers plan and the subsequent resignation of senior UK Ministers.

To help understand how businesses in Scotland are viewing recent developments, over the course of July we have been speaking to around 350 businesses from across the country (and from a variety of different sectors).

The focus of the survey was not on whether or not businesses believe Brexit to be good or bad, but instead, how their preparatory plans were taking shape.

This blog summarises the results of our survey – with a full run down of the results to be published in next month’s Economic Commentary which we’ll be publishing in partnership with Deloitte.Continue reading

August 6, 2018

The spillover effects of UK trade-enhancing industrial policies on the energy and non-energy systems

Key messages

  • The “spillover” effects of non-energy (primarily economic) policies on the energy system are of considerable interest from a policy perspective. In (The spillover effects of UK trade-enhancing industrial policies on the energy and non-energy systems) we analyse the impacts of export promotion policies – a key element of the UK’s Industrial Strategy – on the energy system and energy policy goals.
  • As the impacts of such policies are, in a large part transmitted via their effects on the economy, we adopt a computable general equilibrium model of the UK (UK-ENVI) that fully captures the interdependence of the energy and economic systems.
  • Our simulation results suggest that an across-the-board stimulus to exports stimulates all major economic indicators, and increases total energy use significantly. The energy intensity of GDP increases – not directly through energy exports – but indirectly through the energy sectors’ linkages to other sectors.
  • Export led growth therefore impacts on energy use – and significantly so. This in turn is likely to have an adverse impact on emission targets.
  • Policy makers should be aware of the fact that a successful implementation of the Industrial Strategy may create significant tensions with the UK’s Clean Growth Strategy, for example, and with the goals of energy policy more generally, in the absence of offsetting policy initiatives.
  • Ultimately, a knowledge of such spillover effects of economic policies on the energy system creates the potential for more effective and efficient policy making.

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August 2, 2018

The latest RBS Scottish Business Monitor

Yesterday, the latest Royal Bank of Scotland Scottish Business Monitor (SBM) was published.

2018 marks the 21st year the SBM has been run by the Fraser of Allander. The survey provides a snapshot of activity in the Scottish economy well in advance of official data. It also acts as a gauge of future activity levels by monitoring the optimism level of firms.

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August 1, 2018

What might high temperatures and low rainfall mean for the Scottish economy?

Scott J. McGrane, Grant Allan and Graeme Roy

The prolonged period of warm and dry weather during June and early July is at odds with what many of us would call a “traditional Scottish summer”. These conditions however, are representative of a number of quite extraordinary global weather events that have occurred in the past few months. From the ongoing drought conditions, wildfires and subsequent flooding and landslide events that ravaged California last year, the near-miss of “day zero” in Cape Town, where dry conditions and poor water management almost resulted in no water supply being available, and the global heatwave currently impacting many countries across the globe, climatic extremes have had significant impacts on livelihoods, infrastructure and economies alike.

In this note we set out whether this is genuinely atypical weather, what the consequences have been for water in Scotland (both in terms of supply and demand), before discussing what is currently known about the links between Scotland’s economy and water. We conclude with a discussion of what this recent period might mean for the Scottish economy in a future climate in which water characteristics seen over the last few weeks may be more regular occurrences.

This is part of a new project we’re working on with colleagues at Stanford University in the US looking at the role of technology in improving environmental measurement and the potential implications for our economy.

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July 26, 2018