Spring Statement 2018

Today’s Spring Statement was expressly not a ‘budget’; it contained no new spending or tax policy announcements. Instead, it was an opportunity for the Chancellor to update parliament on the latest UK economic and fiscal forecasts.

It is only three and a half months since the Autumn Statement in November. The big statements then were about the major downward revisions to the forecasts for UK economic growth.

Today there was a smidgeon of relatively better news on the economy. GDP growth in 2017 turned out to be slightly higher than the OBR had expected, and it has also revised up its forecasts for 2018. But these upward revisions in the early years of the forecast are mirrored by slight declines in later years (the OBR has effectively reassessed its view of where we are in the ‘economic cycle’).

Moreover, the upward revisions are nowhere near sufficient to offset the downward adjustments in November (see Chart). UK growth of 1.5% in 2018 is still forecast to lag EU and US growth (forecast at 2.3 and 2.9% respectively by the OECD).Continue reading

March 13, 2018

Recent trends in business investment in Scotland: A Brexit effect?

Late last month, the latest business investment figures for Scotland were published – with a reported fall of 15% over the year.

Are these figures the result of Brexit uncertainty?

If the latest business surveys are believed then this is quite likely in some instances. But a look at the data from well before the EU Referendum reveals that low levels of investment have been a feature of the Scottish economy for years.

Brexit can’t be blamed for every structural challenge that we face.

Initiatives to boost the supply of finance are to be welcomed. But it’s not entirely clear that this is the greatest barrier. In many instances, it is the demand for finance that needs to be developed and supported.

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February 19, 2018

UK regional performance – an increasingly unbalanced picture?

Last month, the ONS published updated statistics on regional GVA for the nations of the UK and English regions.

The data is interesting as it is one of the few (macro) economic datasets produced that allows for comparisons within the UK.

There has been much talk of the dominance of London in the UK economy. But how big is the gap between London and the other parts of the UK in terms of output per head? And has the gap widened or narrowed in recent years? How has Scotland faired, not just relative to the UK as a whole, but against the other devolved nations and English regions?Continue reading

January 25, 2018

Progress: but progress to what?

Professor Ian Wooton, Department of Economics & Fraser of Allander Institute, University of Strathclyde

Today we have had the first demonstrable progress in the Brexit negotiations with the deal on Stage 1 of the process for the UK leaving the EU.

The deal covers key issues such as the financial terms of the UK’s exit, the status of EU citizens in the UK (and UK citizens living in the EU), and the border-issue between Northern Ireland and the Republic of Ireland.

What can we unpick from today’s deal in terms of what the future trading relationship might look like between the UK and the EU?

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December 8, 2017