The decision to extend the deadline for the UK’s withdrawal from the EU has provided some welcome temporary respite from recent months of heightened economic uncertainty, but only for a short while with the range of scenarios as wide as ever, says the Fraser of Allander Institute.
In its latest Economic Commentary, supported by Deloitte, the University of Strathclyde-based research institute also argues that with Brexit dominating the headlines, important questions about the future longer-term trajectory of the Scottish economy are being crowded out.
Today’s report lays out different scenarios for growth in Scotland over the next few years. These include scenarios ranging from a disorderly exit from the EU, in which case Scotland is likely to enter recession, to a scenario where confidence returns, unlocking business investment and boosting the economy to nearer trend growth.
The Institute’s central forecast, based on an orderly departure at some point in 2019, predicts growth of 1.1% in 2019 and 1.4% and 1.5% for 2020 and 2021.
The report shows that economic growth has remained steady over the course of 2018, with growth being fairly broad based, employment at a near record high and unemployment at a record low.
However, critically, earnings and productivity growth remain weak which present challenges for Scotland’s long-term growth prospects.
Economic Perspective articles:
- FAI Perspective 1 – Measuring Scotland’s economic performance
- FAI Perspective 2 – Productivity Trends in Scotland
- FAI Perspective 3 – The financial performance of Scottish Futures Trust (SFT) hub schemes
- FAI Perspective 4 – Scotland’s Councils and the question of local government boundary reform