Forecasts of the Scottish economy [October 2013]

The Scottish economy has shown signs of growth through the first half of 2012, exceeding our expectations so far through the year and has grown slightly less than the UK economy as a whole in this period. In part, this appears due to higher than expected contribution from household spending growth. While survey indicators suggest firms are optimistic about prospects for the second half of the year, we are uncertain about the extent to which a recovery on the back of households facing slow income growth is sustainable. In particular, the recent evidence on the Scottish housing market suggests that any wealth effect from increasing house asset prices is not being felt across all regions of the UK. Recent Scottish export figures show the importance of a swift and positive resolution of the (on-going at time of writing) future of the Grangemouth chemicals and refinery facility for the Scottish economy.