Scotland’s economy is now forecast by the EY ITEM Club to grow by 0.9% this year, more than double the 0.4% rate of expansion projected by the think tank a quarter ago.
EY said that “Scotland’s economic recovery is gaining momentum, suggesting fertile conditions for growth, but pace remains anaemic”.
The accountancy firm projects growth of 1.1% in the UK as a whole this year.
Scottish gross domestic product grew by 0.5% quarter-on-quarter in the opening three months of this year, official figures show, with this rate of expansion having been revised down from 0.7%.
UK GDP increased by 0.7% in the first quarter, as the country exited recession, according to official data. The Scottish economy avoided recession.
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EY Scotland managing partner Ally Scott said: “The change in UK political leadership teamed with a vocal, UK-wide, pro-business vision of growth may currently be acting as a balustrade but our latest forecast suggests Scotland’s economy is on more stable footing than in previous years. While an upwards revision is to be welcomed, the level of growth and productivity remains arguably anaemic and collectively we should push for a more ambitious position.”
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He added: “As we’ve seen with previous forecasts, growth is predicted to come from consumer-facing sectors, especially accommodation and food, largely driven by tourism. This continued reliance on tourism, and Scotland as a destination, makes increased and sustained investment in infrastructure and city centres all the more vital.”
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Mr Scott voiced his belief that “with consumer-facing sectors forecast to drive recovery, the implication is that it doesn’t take much of a headwind for that growth to recede”.
He added: “Depending on this source of recovery can be fragile, especially on the back of public finance messages from the Chancellor and how fiscal policy may impact consumer confidence and spending. All this points to an expedited industrial strategy being even more necessary to safeguard stable, wide-ranging, and sustained economic growth.”
EY Scotland managing partner for financial services Sue Dawe said: “The Scottish labour market continues to mirror problems at a UK level. However, Scotland’s over-reliance on certain sectors means those trends can be felt more acutely. For example, the structural concentration of manufacturing jobs in Scotland relative to other parts of the UK [means] the effects on the local employment market may have higher impact.”
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