Warning that challenges lie ahead
Households benefit as jobs and wages hit new highs
The number of people in jobs is at a record, unemployment is at pre-recession levels and wages are rising.
Today’s State of the Economy report, published by the Scottish Government Chief Economist, reveals the eleventh quarter of expansion across all main sectors.
It says rising house prices, growing consumer confidence and low inflation are helping to boost household incomes and spending.
However, it also warns that further austerity measures from Westminster, low oil prices and subdued demand in global export markets pose challenges for the future.
The report highlights:
- The quarterly growth of 0.6% in quarter one of 2015 signalled the longest continuous expansion in the Scottish economy since 2001.
- Growth in quarter one was broad-based although construction stood out with very strong growth underpinned by public investment, including in infrastructure and housing.
- With employment at or around record levels, the pace of jobs growth is likely to ease, paving the way for a pick-up in productivity growth and real wages.
- The continuing improvement in economic conditions is fostering confidence and investment – visible in rising house prices and high levels of inward investment – and these areas will drive growth throughout 2015.
- External risks remain – low oil prices will continue to have a material bearing on economic conditions in related service activity and slowing growth in China will weigh on global demand.
- Nonetheless, data and forecasts point to a positive outlook for the rest of this year and independent forecasters predict growth in the Scottish economy of around 2.4 per cent in 2015.
Deputy First Minister John Swinney said: “Our programme of investment in public infrastructure is paying off, helping support a particularly strong performance in the construction sector.
“The benefits from this investment will underpin future growth in the Scottish economy and is the appropriate response in order to support and grow the economy rather than the UK Government programme of austerity.
“Although Scotland has not been immune to the global economic challenges over the last few years and there is undoubtedly still work to be done, these figures show our economy’s underlying resilience – with positive trends apparent in both employment and investment levels.
“Just last week we also saw youth employment reach highs not seen since 2005 and the lowest youth unemployment level and rate since 2008.
‘The Scottish Government remains committed to building a fairer, more sustainable, and more resilient economy, translating into real opportunities for business and added security for workers and families.”