Economic Commentary [June 2022]

The Scottish economy had shown healthy growth before contracting in April, but the cost of living crisis means that consumers are spending less on non-essentials

Scotland's economic growth forecast for 2023 has been revised down due to the impacts of cost increases on consumers and businesses, and the likelihood that these will persist for longer than previously thought.

This is according to the latest quarterly Economic Commentary from the Fraser of Allander Institute at the University of Strathclyde.

In the Deloitte-sponsored Economic Commentary, the Institute forecasts growth of 3.8% in 2022 and 0.5% in 2023. The outlook has significantly worsened for 2023 since the last set of forecasts in March 2022.

The Commentary examines the latest data on the global, UK and Scottish economies, including detailed analysis of the latest GDP, employment and inflation figures.

The analysis in this quarter's Commentary shows that consumers are starting to modify their spending behaviour, with over half of consumers reporting that they are spending less on non-essentials. In addition, a third of consumers say they are spending less on food and other essentials.

It is not just food and fuel, however. The analysis shows that the costs of property, both rental and ownership, are also increasing significantly.