Projections suggest that despite the overall growth of 1.3 per cent last year, the economy will see a slight contraction in 2019 because of the “drag” on business investment due to Brexit uncertainty.
However, the forecast from PwC’s latest UK Economic Outlook report also suggests potential growth in 2020 of 1.6 per cent – the highest figure in five years. It also suggests Scotland’s economy is resilient, as only the south-east of England will grow at a faster rate this year, with Scottish growth matching London and the south-west.
The PwC forecast aligns with the Scottish Fiscal Commission’s prognosis of 1.2 per cent growth for this year, which is slightly higher than the 1.1 per cent growth rate it predicts for the UK as a whole.
The new figures come just a day after the Scottish Government welcomed the 0.3 per cent growth rate in the last quarter of 2018 driven by finance services and construction.
John Hawksworth, chief economist at PwC, said: “Our main scenario for UK GDP growth in 2019 has been revised down from 1.6 per cent to 1.1 per cent since our last report in November, reflecting growing evidence of a negative drag on business investment as well as a less favourable global economic environment.
“Brexit-related uncertainty is likely to dampen growth in all regions in 2019, but there could be some acceleration in growth across the UK in 2020 if an orderly Brexit can be achieved.”
Economy secretary Derek Mackay warned Brexit “remains the biggest threat” to Scotland’s economic stability.
He said: “All forms of exit will cost jobs, make people poorer, damage our society and undermine the democratic decision of the people of Scotland to remain in the EU. The Scottish Government is firmly opposed to the UK’s EU exit.”
Scottish Secretary David Mundell welcomed the 2018 growth figures. He said: “The news follows positive employment statistics and shows UK government support included in the Budget and the Spring Statement is having a big impact.”