• MySTV

Brexit is main risk to Scotland's economy, report finds

The EY Scottish ITEM Club 2018 Summer Update said growth should still rise this year.

Brexit: Uncertainty likely to affect business investment.
Brexit: Uncertainty likely to affect business investment. PA

Brexit remains the main risk to Scotland's economy though growth is expected to increase this year, a report has found.

Economic growth is set to increase by 1.3% this year, but this will be at a slower pace than previously predicted and behind the UK's growth rate as a whole, according to the EY Scottish ITEM Club 2018 Summer Update.

The UK economy is now forecast to grow by a slightly higher than expected 1.6% this year.

The report said that Brexit remains the "main risk" to the Scottish economy and that despite the first phase of exit negotiations being complete, there are still a number of key issues that need to be agreed between the UK and the EU, not least the Irish border.

It said that while uncertainty persists, business investment is likely to be lower than might have been the case.

Mark Gregory, EY's UK chief economist, said: "Whatever the long-term impact of Brexit, it is clear that the Scottish and UK economies are growing below historic trend rates.

"The fall in sterling stimulated inflationary pressures and business confidence has been impacted by the increased uncertainty over future trade, regulation and migration policies.

"Although a strong global economy has boosted trade, the overall story is one of below trend growth.

"Businesses need, as a first priority, to ensure their plans are robust to any potential short-term shocks.

"However, this should not be at the expense of continuing efforts to assess long-term opportunities and to position for these."

Scotland's growth this year is due to be driven by the continued positive contribution of consumer spending, albeit at a slower pace as the savings ratio dwindles, the report found.

The strength of exports in 2017 resulted in net trade delivering the biggest boost to the Scottish economy last year, and this is expected to be repeated in 2018.

Employment growth in Scotland is forecast to slow to 0.7% in 2018, and to 0.2% by 2021.

Despite this slowdown, employment is forecast to rise by 39,000 net new jobs from 2017 to 2021.

Private services are predicted to drive the majority of employment growth through to 2021, with construction also contributing to job creation as the sector recovers from eight consecutive quarters of contraction.

https://stv.tv/news/scotland/1418235-foreign-investors-ploughing-more-cash-into-scotland/ | default

The report found that productivity in Scotland remains lacklustre.

Productivity growth averaged at 1.4% per year during the decade to 2006, while in the following decade to 2017 productivity growth averaged just 0.4% per year.

Mark Harvey, EY senior partner for Scotland, said: "Scotland's disappointing productivity record makes for an uneasy read but action can be taken to stall, if not reverse the decline.

"New technologies can help deliver new efficiencies and greater productivity.

"It can also connect the best of Scotland to the rest of the world and introduce major players to new markets where they have new opportunities to succeed.

"Business must also continue to engage with government to explain the challenges facing them both now and in the future, whether related to inflation, access to labour or investment, in order to help find solutions to mitigate against the negative impacts.

"Scotland must ensure it remains competitive and attractive to live, work and do business here."

A Scottish Government spokeswoman said: "Scotland's economy is strong, with output per head among the highest in the UK outside London and the south-east.

"We are also one of the top destinations for inward investment, while Scottish productivity has grown faster than the UK's over the past decade.

"We remain focussed on growing the Scottish economy, which is why the 2018-19 Budget delivered an increase of 64% in the economy, jobs and fair work budget as part of our investment of almost £2.4bn in enterprise and skills.

"But our prospects for longer-term growth are threatened by Brexit and the prospect of being taken out of a market around eight times bigger than the UK's market alone.

"That is what poses the most serious risk to jobs, investment, prosperity and living standards."

https://stv.tv/news/politics/1415884-independent-scotland-could-be-successful-small-economy/ | default

Download: The STV News app is Scotland's favourite and is available for iPhone from the App store and for Android from Google Play. Download it today and continue to enjoy STV News wherever you are.

One account. All of STV.

This field is required. That doesn't look like a valid e-mail format, please check. That e-mail's already in our system. Please try again.
Forgot password?
This field is required. This must be at least 6 characters long. Did you enter your details correctly?
If you've forgotten your details then use the 'Forgot password?' link.
Need to reset your password?

We'll send a link to reset your password to

We've sent you details on how to reset your password

Please check your email and follow the instructions.

Forgotten your email address?

Have you forgotten the email address that you previously joined with? Don't worry, by emailing enquiries@stv.tv we can help.

One account. All of STV.

This field is required. Please enter at least 2 characters
This field is required. Please enter at least 2 characters
This must be at least 6 characters long.
This field is required. This must be at least 6 characters long.
You must be over 16 to join STV.
This field is required. This doesn't appear to be a valid date
We need this to check that you live in an STV region.
This field is required. This doesn't appear to be a valid postcode
Would you like us to email you about our great shows and services from time to time?
We'll only send emails we think you'll like (see example) based on information you have supplied and shows you have watched on STV Player. For details on emails and advertising, see our STV & You page.
Would you like to receive emails from the Scottish Children's Lottery about draws, instant games and competitions?
We support the Scottish Children's Lottery (SCL), which is managed by our colleagues at STV ELM Ltd. You can find out more about the SCL on its website, including its Privacy Policy.

By continuing you agree to our Terms of Use, and understand our Privacy and Cookie Policies.

Upload Profile Picture

Please make sure your image is under 2mb in size and a valid JPG, PNG or GIF.

Are you sure?

Unfortunately, you'll be unable to access our premium content. We’ll be sorry to see you go, but if you change your mind you can rejoin us at any time.

Please verify your STV account

Please verify your STV account using the email we sent you. If you have lost the email, we can send you another one, just click the button below.


We've sent you a new verification email.
Please check your email and follow the instructions to verify your account.

Welcome to STV
Thanks for joining us.


Sorry, you must be at least 12 years old to place a vote for your Real Hero.

Please review our Voting Terms of Use for more information.


Sorry! It seems that you are using a browser that is incompatible with our voting service.

To register your vote please copy the below URL in to your regular mobile browser. We recommend Google Chrome, or Safari.



Sorry, you seem to have already voted in this category.

Thanks for voting

Now share your vote with friends on your social network

Share on twitter Share on facebook

Cast your vote

Please register or sign in to continue.

Cast your vote

This field is required. This doesn't appear to be a valid date

Cast your vote

Please fill out this form to cast your vote. As you are under 16 years old you will not create an STV account. Why do we need these details?

This field is required. Please enter at least 2 characters
This field is required. Please enter at least 2 characters
This field is required. That doesn't look like a valid e-mail format, please check.
Location This field is required.
Parental Consent This field is required.

That's you. All that's left is to click the 'Submit Vote' button below. By doing so, you confirm that you and your parent or guardian have read and accept our Voting Terms of Use, Privacy Policy and Cookie policy, and that the details you have entered are correct. We'll look after them as carefully as if they were our own.