A good few years back I wrote in this column that economic forecasting was a mug’s game – because of the host of uncertainties complicating the outlook. If that was the case then, it is the same case multiplied many-fold at present. Nobody knows what is going to happen – especially in the UK but also in the rest of the economic world – next week let alone a couple of years down the turnpike!

So let us get back to basics. Even economic data on the recent past is subject to uncertainty and revision, but the uncertainties are less pronounced than those when looking forward. Latest figures show that Scottish Gross Domestic Product fell back by 0.3% in the second quarter of this year. This was no great surprise as UK GDP contracted by 0.2% in the same period and similar factors were at work.

Guess what – it was all about Brexit. Both UK and Scottish GDP had out-performed expectations in Q1, largely because of companies stock-piling to prepare for the Brexit shock at end March. When that exit was deferred some stock-piling was unwound, leading to GDP decline. Some UK indicators suggest that Q3 has started better than Q2 ended, but nobody knows what the impact of total and all-consuming Brexit-related activity will be over the rest of this year and beyond.Maybe the UK and/or Scotland will be seen to have experienced technical recession –defined as two successive quarters of negative growth – when Q3 data emerge; and the latest Scottish Business monitor points to business activity in Scotland having declined in that third quarter. But frankly this will all be pretty meaningless in the grander order of economic matters.

What cannot be hidden, unfortunately, is that our economy continues, at this aggregate level, to underperform. If we consider growth over the past full year, smoothing out the ups of Q2 2019 and the downs of Q3, then we see GDP growth of a miserly 0.7%.

Three points merit mention. First this figure is only just over one half of the UK equivalent. Second, both UK and Scottish growth continue to under-perform as compared to prior expectations and what can be termed the long term trend. Things ain’t what they used to be on the GDP growth front. Third, this growth of + 0.7% is for the population as a whole, but the population continues to grow. Allowing for that growth GDP per head over the year to end Q2 2019 grew in Scotland by 0.1%.Given the known uncertainties about even historic data, that miniscule level of growth is not statistically different from zero.

The ghastly spectre of a no deal Brexit still hangs over us. The Bank of England has published a range of scenarios of the possible impact at the UK level – note scenarios not forecasts. To exemplify the scale of the risk, note that their worst case possibility sees a decline in UK GDP by 5.5% - from ‘peak to trough’. This is less dramatic than the Bank saw as possible a year ago, thanks to companies’ efforts to prepare for the nasty shocks. If Scottish GDP declined by 5.5% that would equate to a hit of £9 billion – you can calculate the per head effect!

Please do note this is their worst case scenario; that we do not know yet if ‘no deal’ will materialise; and that there are potential ways of mitigating the shock.

Traditionally mitigation would come via monetary and fiscal policies. We have already seen the effective end of the age of austerity. The Chancellor of the Exchequer (at the time of writing!) Sajid Javid in his September Spending Round announced an extra £12billion of resource spending (in England) for 2020/21. Whosoever is Chancellor as this financial year rolls on may well announce even more fiscal easing. But if this £12billion continues to apply then, applying the Barnet Formula, this would equate to an extra £1.1billion on the Scottish block grant, an increase of over 2%.

Of course taxes could rise alongside public expenditure, and in Scotland the complexities surrounding how the final Budget figure is derived are substantial. But there is the probability of some fiscal easing for the UK and for Scotland to help offset any Brexit shock.

The scope for monetary easing is limited. Our bank rate has been held at 0.75%, with the next meeting of the Bank’s Monetary Policy Committee set for 7th November. Frankly any thoughts of a rate rise in the medium term must have dissipated, but the scope for rate cuts is severely constrained. The Bank is already suggesting that rates are set to stay ‘lower for longer’. More quantitative easing (QE) is another possibility but nobody really understands how QE would impact in the context of ‘no deal’ uncertainties.

The optimists amongst you can also hope for assistance via buoyancy in the global economy. If only! The USA/China dispute is hitting the latter hard. As just one example growth in industrial output in August was the lowest for 17 ½ years. Our erstwhile friends in the EU are also stagnating, causing the European Central Bank to cut interest rates and add a further cash stimulus. This makes sense but the impact will be minor. And then there is the little matter of an oil price shock, following the attacks on Saudi Arabian production. Happy days.

Jeremy Peat is visiting professor the University of Strathclyde.