Brexit fac­tor weigh­ing on Scot­tish econ­omy

GDP growth north of the bor­der to be lower than UK for next two years

The Courier & Advertiser (Angus and The Mearns Edition) - - Business - Gra­ham huband busi­ness ediTor

The Scot­tish econ­omy is set to lag be­hind the UK for the next two years as the ram­i­fi­ca­tions of Brexit hits and con­sumers tighten their belts.

Ac­coun­tancy gi­ant PwC’s lat­est UK Eco­nomic Out­look re­port sug­gests Scot­land will see growth of 1.2% this year and 1.1% next year. The wider UK is ex­pected to out­per­form Scot­land with a 1.5% in­crease in GDP this year and a 1.4% rise next year.

Across Britain, eco­nomic growth held up bet­ter than ex­pected in the six-month pe­riod fol­low­ing the Brexit vote, but the sit­u­a­tion de­te­ri­o­rated in the first half of 2017 as in­fla­tion took its toll.

“While some may see con­cern at the fact Scot­land and North­ern Ire­land are at the bot­tom in terms of GDP im­prove­ment, there is ac­tu­ally very lit­tle sep­a­rat­ing most of the UK,” Lind­say Gar­diner, re­gional chair­man for PwC in Scot­land, said.

“This year the best growth we ex­pect any re­gion, ex­cept for Lon­don, will see is 1.5% and it is 1.4% next year.

“Where con­cerns should per­haps be fo­cused is around wage growth as many are off­set­ting lim­ited growth through in­creased bor­row­ing – which may have a longer term im­pact via in­ter­est rate rises or em­ploy­ment down­turn.

“It’s too early to spec­u­late on how the Brexit talks are go­ing to im­pact growth, how­ever cur­rent ex­change rates have some off­set­ting ben­e­fits for net ex­ports.

“The main mes­sage we are dis­cussing with busi­nesses at the mo­ment is to con­sider where Brexit may have an im­pact and to make con­tin­gency plans for a num­ber of sce­nar­ios, par­tic­u­larly those who may face changes in cus­toms tar­iffs or em­ploy­ment chal­lenges.”

Of the eco­nomic sec­tors that PwC did ex­am­ine, it said the Scot­tish prop­erty mar­ket was demon­strat­ing an un­even bounce back from a mar­ginal price re­trac­tion dur­ing last year.

The Scot­tish prop­erty sec­tor is on track for 2.5% growth this year but it said Brexit was im­pact­ing on the num­ber of trans­ac­tions be­ing com­pleted.

How­ever, PwC said it ex­pected the av­er­age house price in Scot­land to grow from £139,000 to £160,000 by 2020.

Richard Snook, se­nior econ­o­mist at PwC, said: “There is a huge dis­par­ity in how sub-re­gional hous­ing mar­kets have per­formed since the re­ces­sion.” busi­ness@the­courier.co.uk

Top: re­gional vari­a­tions are ev­i­dent in the Scot­tish prop­erty mar­ket. Above: Lind­say Gar­diner of PwC in Scot­land.

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