Falling immigration and Brexit set to hit Scottish economy

FACTORIES: Manufacturing miniboom predicted to end later this year

Brexit uncertainty is set to cast a shadow across the Scottish economy for several years despite a predicted rise in GDP, according to a new report by EY.

The report predicts that after a subdued start to the year, the economy will grow more slowly than last year, mirroring the wider global economy.

The summer forecast also sees Scotland’s non-oil GDP achieving growth of just 1% this year against 1.3% in 2018 and 1.4% in 2017.

The growth enjoyed by Scottish manufacturing is unlikely to continue in 2019, with no growth in factory output this year, except in the food, beverages and tobacco sector.

However, the unemployment rate in Scotland is projected to fall from 3.9% in 2018 to 3.7% in 2022, while Scottish employment is projected to increase 2% by 2022, although falling immigration levels will see the working age population decline.

This decline could gradually boost earnings growth, but this is unlikely to increase consumer spending which is expected to be subdued.

EY Scotland’s managing partner Ally Scott said: “Scottish consumer confidence and business sentiment are expected to weaken this year, with the global economy and Brexit uncertainty major causes.

“Even if a Brexit deal is agreed in the coming months, difficult trade negotiations are likely to follow.

“This, combined with other global worries, means that Scottish companies are likely to remain very cautious in their investment and employment decisions.”

Difficult trade negotiations will likely follow Brexit. ALLY SCOTT