Another economic year has passed and the usual Hogmanay question as to what lies ahead becomes even more difficult to answer. There are two key messages which I have tried to get across in columns over the past two or three years.

My first key message is that, after the great recession which commenced in 2008, we should not be expecting a return to what we treated as ‘normal’ before the trauma struck. Sadly the future will not consist of year after year of relatively stable, low inflation, growth around what we considered trend – i.e. for the UK and Scotland some 2.5 per cent to three per cent per year increases in GDP. Instead, as per my second key message, we should expect far more volatility and uncertainty, domestically and internationally, than had previously been experienced; just as global warming has led to wide variations in climatic conditions, so economic change has led to major shocks and continuing economic uncertainties.

The first of two major elements of economic change has been the rise of the newly emerging economies, particularly China and increasingly India, both massive in scale and also in potential global economic impact. Their emergence has resulted in a major restructuring of the global economy but also, as we have seen in 2015, specific uncertainties of their own. The sharp slowdown in China caused global deceleration along with major shocks across oil and commodity markets and for countries specialising in those products. It also caused a ‘pause for thought’ for other economies just starting to restructure to take advantage of the emerging economic mega-states.

The second change has been the increased risks across the financial sector. This order of risks generated the recession and dominated economic debate in the years immediately post 2008; but I am not convinced that risks related to the financial sector have subsequently simply dissipated.

Both the UK and Scottish economies look to have slowed sharply in the second half of last year. At the UK level this could pose major problems for the Chancellor in his Budget next spring. The outlook has changes significantly in the short period since his Autumn Statement. In November he was able to base his public finance pronouncements on remarkably positive economic and financial forecasts from the (independent) Office for Budget Responsibility. He simply glowed in triumph. But what if, as seems highly likely, the OBR makes a sharp U-turn to far lower forecasts for growth of both the economy and tax revenues?

I spy troubles ahead! Does Mr Osborne announce more swingeing cuts in welfare and the expenditure of Government departments? Or accept even further delay in a return to balanced finances and significant reductions in Government debt? Neither sounds much fun for the man. But he is stuck with the OBR forecasts whether they come over as optimistic (as last November) or perhaps a touch on the pessimistic side.

2016 should, according to many analysts, be the year when – at long last – UK interest rates start to edge upwards. That would be perceived as signalling a step along the road back towards normality. We saw US rates move upwards at the end of 2015. That may or may not prove to be the correct move for the USA. It most certainly would not make sense in the UK. Here inflation risks are non-existent – or perhaps still on the down side; growth is slowing; and our Chancellor could well further tighten fiscal policy at the Budget. It is quite conceivable that we now face a further full year with base rate staying where it is right now and has been for so long. If so that is fine; the objective is not a return to the ‘good old days’ but rather learning to cope with the new dynamics.

The spreading impact of the slowdown in oil and gas-related activity, as the oil price continues to decline, looks to be the main cause of the Scottish economy slowing more than the UK as a whole. Forecasting oil prices is a total mugs’ game, but I see no strong reason to expect oil price recovery any time soon. A combination of demand and supply side issues should keep the price well below $50 per barrel through 2016. In Scotland we need to see a continuation of re-balancing, with our highly skilled oil sector operatives focussing even more on overseas markets, and major progress in innovation and competitive drive from our other high tech and high skilled specialist sectors.

Further budgetary tightening in the spring would of course pose problems for John Swinney – and indeed all in Scotland. However, out there in the’ real economy’ two topics should dominate debate as we continue the search for strong, sustainable and inclusive growth. First (and no apologies for repetition from past columns) is the question of how to generate higher investment by companies, greater innovation and more ambition to compete and enter new markets. Along with the SCDI I have proposed the Scottish Government, with major input from the private sector, should establish a short-term productivity commission. The target should be developing policy priorities for Government and key messages for business and the likes of Scottish Enterprise. This should be deemed top priority.

My second topic relates to the ‘hollowing out’ of the labour force. Unemployment in Scotland is now moving in the wrong direction, and even while it was falling too many new jobs were low skilled and basically precarious in nature. Further it was difficult to see a transition path through to higher skilled, higher value-added and higher paid jobs.

There is another topic here for another day, but my answer again relates to productivity. Making lower skilled jobs more productive is feasible and should lead to some combination of higher wages based on higher skills, lower prices for basic goods and services and greater profitability for struggling economic sectors like retailing. Inclusive growth must mean enhanced focus at this level rather than simply at the top of the heap.

- Jeremy Peat is a visiting professor at the University of Strathclyde International Public Policy Institute.