Outlook and appraisal [January 1979]

The revival in economic activity in Scotland which occurred in 1978 is unlikely to be maintained during 1979. The fairly limited expansion which did occur in 1978 was largely a response to substantial increases in real disposable income. Between April 1977 and April 1978, average male earnings in Scotland rose from £78.3 to £88.5 per week, a rise of 13.0%. Over the same period, retail prices in the UK rose by only 7.9%, largely in response to the stability of the pound, which in turn reflected the more conservative monetary stance which the government had been forced to adopt. Tax handouts in the April 1978 budget amounting to some £2bn further boosted real disposable incomes. Consequently, retail sales expanded substantially and the average weekly expenditure of Scottish households rose considerably above the 1977 figure of £64.81. This brief paper also considers the influence the European Monetary System (EMS) may exert on the Scottish economy.