SCOTTISH economic growth is set to stay ahead of the UK as a whole this year despite Brexit having a dampening effect on the British economy as a whole.
Growth in Scotland is expected to to dip to 1.2% in 2019, but that will be slightly ahead of 1.1% in the UK
The good news for Scotland is that growth could accelerate to 1.6% in 2020, according to PwC’s latest UK Economic Outlook report.
PwC predictions concern Scotland’s Gross Value Added (GVA) growth – GVA is the sum of gross domestic product (GDP) with taxes and subsidies taken into account
The projections come after yesterday’s official figures show Scotland had GDP growth of 0.3% in real terms during the fourth quarter of 2018, driven by growth in business services and finance.
This follows growth of 0.2% in the third quarter of 2018.
Compared with the same period in 2017, growth in the Scottish economy expanded by 1.3%, in line with the UK overall.
Out of 12 nations and regions analysed by PwC, only the South East of England is expected to grow at a faster rate than Scotland this year, and at 1.3%, Scottish growth will match London and the South West.
Economic growth across the UK is expected to slow as a result of the drag on business investment due to ongoing uncertainty over the outcome of Brexit.
Lindsay Gardiner, PwC Scotland regional chairman, commented: “While there are undoubted challenges affecting the UK, it is encouraging to see the Scottish economy among the most resilient parts of the country.
“In spite of the ongoing uncertainty over the UK’s future relationship with Europe, we are continuing to see investment in the private and public sectors, with City Deals funding across the country set to play an important role in Scotland’s near-term development.
“Scotland’s GDP grew by 1.4% compared to 2017, the same as the UK so the outlook for the current year, albeit in GVA terms, suggests a slight contraction as macro-economic factors relating to Brexit come to a head, before growth accelerates to 1.6% in 2019.”
The PWC Outlook report says that consumer spending has driven the UK economy since the June 2016 referendum to leave the European Union, and this has been supported by recent increases in real income growth.
Countering this is a cooling of the housing market, and further rises in household borrowing which may be hard to sustain.
John Hawksworth, chief economist at PwC, comments: “Brexit-related uncertainty is likely to dampen growth in all regions in 2019, but there could be some acceleration in growth across the UK in 2020 if an orderly Brexit can be achieved.”
The latest UK Economic Outlook looks into historical trends in the UK’s nations and regions, stretching back to the 1970s.
It notes the annual average GVA growth in Scotland in the 1970s was 2.3% before falling to 1.5% in the 1980s as the country felt the impact of the slowdown in industrial output as heavy industries contracted.
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