Scots face new recession risk, warns SNP’s OWN expert

SCOTLAND’S economy may teeter on the brink of recession again next year amid growing pressure on family finances, the Scottish Government’s own chief economist has warned.

A report published yesterday predicts another year of low economic growth north of the Border, which will be slower than in the rest of the UK.

It raises concerns that family budgets are being ‘squeezed’ as a result of rising inflation and interest rates. This could cause a downturn in spending which will result in more damage, it states.

Opponents said the SNP’s plan to hike taxes could add further misery for hard-pressed families. Dr Gray Gillespie’s report analysed a range of independent forecasts to estimate that there will be growth of just ‘around 1 per cent’ in Scotland next year.

But it also points to a previous report this year which warned that ‘it is not unexpected’ to have a negative quarter, when GDP is lower than the previous year.

Scottish Conservative finance spokesman Murdo Fraser said: ‘Growth in Scotland will continue to lag behind the rest of the UK for some time to come.

‘If the SNP presses ahead with its tax raid on workers and businesses, that gulf will only grow.

‘The SNP’s anti-business agenda and obsession with separation has been hugely harmful to our economy. And if Nicola Sturgeon stays on the same course, the damage caused will be even greater in years to come.’

The latest Scottish Government ‘state of the economy’ report says independent GDP estimates suggest growth of between 0.9 per cent and 1.2 per cent for the whole of this year in Scotland and then between 0.7 per cent and 1.4 per cent next year.

It estimates that the average forecast is for 1.6 per cent growth across the UK this year then 1.4 per cent next year.

Dr Gillespie states: ‘Brexit remains the key risk to Scotland’s economy, particularly to business and consumer sentiment.’

He also warns that ‘the acceleration in inflation’ largely caused by the decline in the value of the pound has ‘squeezed households’ spending power’, with growth in earnings not keeping pace with inflation.

And he points out that interest rates are expected to continue to rise, following the first increase in a decade earlier this month. He said: ‘The response of consumers to these changes in the economic outlook will be key to determining Scotland’s future prospects.’

Nicola Sturgeon could add further misery for under-pressure households by raising taxes.

Last week, the First Minister said that ‘the time is right’ to increase income tax rates to fund public services. A proposed 21p tax band would hit those earning more than £24,000 a year, as well as increasing charges for higher and additional rate payers.

The report says weekly earnings grew by 2.4 per cent to £547 – but this was out-paced by rising inflation, resulting in real wages declining by 0.3 per cent in Scotland.

Economy Secretary Keith Brown said: ‘It is encouraging to see positive forecasts on growth. However, growth is slower than we would like and the UK Government’s stance on Brexit presents a huge threat to prosperity in Scotland.’

Comment – Page 18

‘Hugely harmful to our economy’ ‘Threat to prosperity’