Forecasts of the Scottish economy [June 2013]

Despite continued challenges in the domestic and external environment, there are little signs that some of the downside risks to growth in 2013 are likely to materialise. There is growing evidence of a recovery in the United States, and while some Eurozone countries have seen their growth forecasts downgraded in recent months, forecasts by major institutions for the Euro area as a whole have not been revised down as significantly as they have been on occasions over the last four years. Following revisions to some of the (experimental) national accounts data for Scotland, an interesting pattern of pre-recession divergences in income and expenditure between Scotland and the UK as a whole has emerged, which will require further examination to explore its consequences for the future path of consumer spending growth in Scotland. We have kept our forecast for growth in Scotland through 2013 at 0.9%, with a minor revision of our forecast for 2014 to 1.6% from 1.7%. Our forecast for growth in 2015 is now 2.1%, up by 0.2 percentage points. The jobs outlook for Scotland is forecast to improve relative to our previous forecasts with modest growth in net employee jobs each year through the forecast horizon.