Scotland’s economic performance is diverging from that of the UK, according to a leading think-tank which has revised its Scottish projections for growth and jobs figures downwards over the coming months.
Strathclyde University’s Fraser of Allander Institute expressed concern about Scotland’s “weak productivity and poor export performance” as it published its analysis of the economy north of the border.
Scotland’s weak productivity and poor export performance necessitates that the Scottish Government tackle these issues more directly if it is to raise the long-term growth rate of Scotland’s economyBrian Ashcroft
The institute’s latest economic commentary, sponsored by PwC, predicted Scottish growth of 1.9 per cent in 2015 – a decrease from the 2.5 per cent it forecast in June.
The 2015 figure is also markedly below the latest forecasts for the UK, which currently stand at 2.5 per cent.
The downward revision for Scotland continues in 2016 when growth is expected to pick up to 2.2 per cent, a slight reduction from the 2.3 per cent forecast in the think-tank’s June figures.
The commentary did, however, anticipate Scottish growth exceeding that of the UK in 2017 forecasting 2.5 per cent in Scotland compared with 2.3 per cent.
In terms of employment, the commentary revised down its central forecast from the 51,250 net jobs growth predicted in June for 2015 to 49,400.
Similary net jobs growth for 2016 has been revised downwards from the 49,600 predicted in June to 45,000.
According to the Institute, construction remains the main economic driver in Scotland with public spending on infrastructure underpinning growth.
Meanwhile the Scottish service sector has been hit by the onshore impacts of the lower for longer oil prices. The oil price of less than $50 per barrel has hit services industries as well as mining and quarrying.
The picture is reversed in the UK with service sector performing better while construction weakens.
The UK Government’s austerity measures were identified as a potential threat to the economy as well as high household debt.
While the report’s authors urged George Osborne to re-think his controversial tax credit cuts.
Brian Ashcroft, Emeritus Professor of Economics at the University of Strathclyde said: “With growth slowing right across the UK and especially in Scotland, now is the time for the Chancellor to re-think his cuts to tax credits and for the Bank of England to continue to hold rates.
“Scotland’s weak productivity and poor export performance necessitates that the Scottish Government tackle these issues more directly if it is to raise the long-term growth rate of Scotland’s economy.”