Forecasts of the Scottish economy [June 2012]

Research output: Contribution to journalArticle

Abstract

Domestically, Scottish consumers are facing continuing income growth weakness and have increased savings, cutting back on spending. Falling inflation will help relieve the pressure on household budgets, but inflation is not predicted to fall below target until the end of 2012. Government spending reductions will focus on current spending after significant reductions in capital spending in
2011-2 – alongside private sector investment falling – damaged activity in the construction sector through 2011. Outside Scotland, the Euro area seems unlikely to have the same political or institutional shape at the end of our forecast horizon. In light of mixed but generally weak survey data we have revised down growth prospects for 2013 and 2014, and held our forecast for growth in 2012 constant at 0.4%. The number of jobs in Scotland have fallen by just over 20,000 each year of 2010 and 2011 and are forecast to decline to the end of 2012. Unemployment forecasts have been revised down as employee jobs series for Scotland have been themselves revised, and we are now forecasting that (on the ILO measure) that the unemployment rate will increase to 9.3% by the end of 2012. In addition to our central forecast, we explore the consequences for the Scottish economy of two seismic events affecting the Euro area: the exit of Greece for the Euro currency, and the complete breakdown of the single currency area. These are discussed.
LanguageEnglish
Pages24-37
Number of pages14
JournalFraser of Allander Economic Commentary
Volume36
Issue number1
Publication statusPublished - Jun 2012

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Scotland
Euro area
Inflation
Survey data
Construction sector
Savings
Currency area
Single currency
Forecast horizon
Unemployment
Household
Income growth
Employees
Private sector
Exit
Currency
Breakdown
Unemployment rate
Government spending
Greece

Keywords

  • Scottish economy
  • Scottish economic performance
  • economic forecasts

Cite this

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abstract = "Domestically, Scottish consumers are facing continuing income growth weakness and have increased savings, cutting back on spending. Falling inflation will help relieve the pressure on household budgets, but inflation is not predicted to fall below target until the end of 2012. Government spending reductions will focus on current spending after significant reductions in capital spending in2011-2 – alongside private sector investment falling – damaged activity in the construction sector through 2011. Outside Scotland, the Euro area seems unlikely to have the same political or institutional shape at the end of our forecast horizon. In light of mixed but generally weak survey data we have revised down growth prospects for 2013 and 2014, and held our forecast for growth in 2012 constant at 0.4{\%}. The number of jobs in Scotland have fallen by just over 20,000 each year of 2010 and 2011 and are forecast to decline to the end of 2012. Unemployment forecasts have been revised down as employee jobs series for Scotland have been themselves revised, and we are now forecasting that (on the ILO measure) that the unemployment rate will increase to 9.3{\%} by the end of 2012. In addition to our central forecast, we explore the consequences for the Scottish economy of two seismic events affecting the Euro area: the exit of Greece for the Euro currency, and the complete breakdown of the single currency area. These are discussed.",
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Forecasts of the Scottish economy [June 2012]. / Allan, Grant.

In: Fraser of Allander Economic Commentary, Vol. 36, No. 1, 06.2012, p. 24-37.

Research output: Contribution to journalArticle

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