Today’s State of the Economy report, published by the Scottish Government Chief Economist, highlights that the Scottish economy saw its eleventh quarter of expansion at the start of 2015, recording growth across all main sectors of the economy. The report said that the impressive growth – despite challenging conditions – demonstrates the resilience of Scotland’s economy and has driven positive trends in the labour market.
The report said employment levels reached record highs over the last year, unemployment is close to its pre-recession average rate, and there are now signs that real wages are rising.
These trends have combined with other factors – rising house prices, growing consumer confidence and low inflation – to boost household incomes and spending, which have been positive for the economy, according to the document.
However, it warned that both internal and external challenges remain. For example, from further tightening of budgets by the UK Government, the impact of low oil prices on oil and gas sector profitability and investment, and subdued demand in global export markets alongside the strength of the pound.
The report highlights:
- The quarterly growth of 0.6 per cent in quarter one of 2015 signalled the longest continuous expansion in the Scottish economy since 2001.
- Growth in quarter one was broad-based although construction stood out with very strong growth underpinned by public investment, including in infrastructure and housing.
- With employment at or around record levels, the pace of jobs growth is likely to ease, paving the way for a pick-up in productivity growth and real wages.
- The continuing improvement in economic conditions is fostering confidence and investment – visible in rising house prices and high levels of inward investment – and these areas will drive growth throughout 2015.
- External risks remain – low oil prices will continue to have a material bearing on economic conditions in related service activity and slowing growth in China will weigh on global demand.
- Nonetheless, data and forecasts point to a positive outlook for the rest of this year and independent forecasters predict growth in the Scottish economy of around 2.4 per cent in 2015.