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FAI Economic Commentary, 2019 Q2

The Scottish economy may have grown by its fastest rate in two years in the first quarter of 2019, but the risks to Scotland’s growth prospects have not gone away, says the University of Strathclyde-based Fraser of Allander Institute.

In its latest Economic Commentary, supported by Deloitte, the research institute highlights how much of the recent up-pick in growth is likely to have stemmed from firms implementing ‘no deal’ contingency plans. Underlying growth – particularly in key sectors of the economy – remains fragile.

Professor Graeme Roy, Director of the Fraser of Allander Institute, said: “Three years on from the Brexit Referendum, we still have little clarity over the timing or format of the UK’s departure from the EU.

“Given the scale of the challenges that a no deal Brexit might bring, it is no surprise that businesses are taking matters into their own hands by rolling-out contingency plans.

“Much of the Brexit debate has focussed upon the potential dislocation of trade patterns. But arguably an even greater challenge, particularly over the longer-term, are the implications for Scotland’s population.

“Our analysis shows that a significant amount of the long-term growth gap between Scotland and the rest of the UK can be explained by differences in population growth.

“Should Brexit make migration to Scotland more difficult, or less attractive, then this could have serious implications for key sectors and the economy at large.”

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Founded in 1975, the Fraser of Allander Economic Commentary is the leading publication on the Scottish economy and offers an authoritative and independent analysis of the key issues of the day.