State of the Economy report
Scotland’s economy continues to perform well
Brexit uncertainty impacting Scotland’s economy.
Scotland’s economy continued to perform well in 2018, with growth returning across all sectors and the labour market delivering record levels of performance.
However, the State of the Economy report, published by Scotland’s Chief Economist Gary Gillespie, says intensifying Brexit uncertainty is causing concern and already impacting on key economic indicators. In particular, a no-deal scenario is seen as a significant risk that would lead to a ‘major dislocation’ to the Scottish economy.
The report highlights:
• Business and consumer sentiment surveys have reported notable falls in confidence. The Scottish Consumer Sentiment Indicator has fallen to its lowest reading since the series began in 2013 while investment decisions by business have been skewed towards supply issues or put on hold
• A no-deal Brexit would disrupt logistics, supply, trade, investment, migration and market confidence. Any shock would likely have disproportionate sectoral and regional impacts and if prolonged, would lead to significant structural change in the economy
• Current independent forecasts for the Scottish economy are positive for 2019, with growth between 1 and 1.5 per cent, but these remain highly uncertain until Brexit is finalised.
The report also presents new analysis of the long term impacts of Brexit on different sectors, showing that the goods sector would be worst affected.
Economy Secretary, Derek Mackay said:
“Scotland’s economy continues to perform well with further growth and record low unemployment.
“But we cannot ignore the fact that this is being put at risk by the increasing uncertainty associated with Brexit, and in particular the risk of a no-deal scenario.
“Brexit, in whatever form, will cost jobs, make people poorer, damage our society and undermine the democratic decision of the people of Scotland to remain in the EU.
“It is vital that the UK Government takes immediate and urgent steps to rule out a no-deal Brexit, which threatens to have devastating consequences for our economy and extend the Article 50 process. Our first priority is staying in the EU, in line with the overwhelming vote in Scotland to remain, and we support another referendum on EU membership. Short of that, the least damaging option is to remain in the Customs Union and European Single Market of 500 million people; eight times larger than the UK market alone.”
The full State of the Economy report is available online at: https://www.gov.scot/publications/state-economy-february-2019