07 March 2013

Genuine economic growth seen in Scotland

Small businesses in Scotland will be encouraged to see strong signs of recovery in the economy, after the latest Economic Commentary from the University of Strathclyde and PricewaterhouseCoopers revealed there was evidence of genuine growth in the third quarter of 2012.

However, the longevity of the country’s strong economic performance has been questioned, with survey evidence finding that a there was a weakening of business sentiment in the final quarter of last year amid uncertainty of things to come.

The findings

The University of Strathclyde’s Fraser of Allander Institute has lowered growth forecasts to 0.9% growth in 2013 and 1.7% in 2014, rising up to 1.9% in 2015. According to PwC representatives, the report highlights the crucial role both UK and Scottish governments will play in creating an environment that not only stimulates business growth, but also nurtures entrepreneurship and creates new services and jobs.

Brian Ashcroft, emeritus professor of economics at the University of Strathclyde, said: “We expect to see some modest growth in the Scottish economy this year.

“However, growth should be a lot higher than it is given we are now 5 years on from the start of the great recession. Household demand, net trade and investment demand remain weak while fiscal austerity continues with 68% of planned benefit cuts and 78% of current departmental spending cuts still to come after April this year.”

The financial sector and the construction sector will be the key focus for Scotland moving forward, with both industries often outperforming the UK as a whole.