Brexit: A deal on the horizon?

Against all odds, it would appear that *some* progress has been made with regard to a possible deal that would see the UK leave the EU on the 31st October.

Securing an agreement in just 17 days is far from guaranteed and it seems likely that, even if some further progress is made, a short temporary delay – either to iron out any remaining administrative issues or to allow for a UK General Election – seems likely.

So what might this new deal mean for the Scottish economy?

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October 14, 2019

What’s happening to the Scottish block grant in 2020/21?

Last month’s UK Spending Round announced increases in UK Government resource spending of 4.1% in real terms next year. Will the Scottish block grant increase by more or less than this, and why? And what will this mean for the Scottish budget?

Departmental spending plans of the UK Government affect the Scottish block grant via the Barnett formula. The block grant increases by a population share of increases in comparable spending by the UK Government in England (or England and Wales in some cases).

And whilst revenues from devolved taxes have an increasingly material impact on the resources available to the Scottish Government, the block grant remains the most critical factor in determining the overall size of the Scottish budget.Continue reading

October 2, 2019

What could “no-deal” mean for the Scottish Economy?

Three years ago, we launched this blog shortly after the EU referendum.

Since then, we’ve tracked the performance of the Scottish economy through a period of unprecedented uncertainty.

Back in 2016, virtually no one – apart from a small number on the fringes of the debate – was even prepared to consider the prospects the UK leaving the EU without a deal. A smooth exit, a new relationship with the EU and the prospect of new trade deals was supposedly going to be straightforward.

Jump forward to today and the prospects of a ‘no deal’ outcome remains a distinct possibility. The hard-work on agreeing any future trade deal has yet to even start.

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September 9, 2019

Spending Round 2019: what does it mean for the Scottish budget?

As had been widely expected, UK Chancellor Sajid Javid used today’s Spending Round to announce significant increases in UK Government resource spending – to fund day-to-day public services – in 2020/21.

The announcements amount to an additional £12bn of resource spending next year relative to the plans that his predecessor Phillip Hammond had already pencilled in. This including a substantial uplift to schools spending (£2.6bn), extra resources for social care (£1bn), and for the police (£750m).

Of course these figures relate to spending in England. But the increases in spending in England will generate an uplift to the Scottish block grant, via the Barnett Formula.Continue reading

September 4, 2019

Is the link between labour productivity and wage growth still alive in the UK?

Frantisek Brocek is a graduate of Economics at the University of Strathclyde and is about to start studying an MSc. in Economics as part of the Scottish Graduate Programme.


UK labour productivity rose steadily at an average rate of 2.2% per year prior to 2008, but has failed to return to its pre-crisis trend since then.

Productivity matters. One reason it matters is through its links to the real wage that is affordable to employers. As productivity rises it takes fewer hours of work to produce the same amount of output. This allows employers to increase wages. Higher real wages enable workers to afford higher levels of consumption, enjoy more leisure, and potentially invest more in their health and education.

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August 26, 2019