UNCERTAINTY over the outcome of Brexit negotiations is having a negative impact on economic growth and Scotland’s housing market, according to a new report.
The latest projections from PwC put Scottish growth below the UK average at 1.2 per cent this year and 1.1 per cent next. Growth in UK Gross Domestic Product (GDP) is forecast at 1.5 per cent and 1.4 per cent respectively.
PwC attributed this to “slower consumer spending growth and the drag on business investment from ongoing political and economic uncertainty relating to the outcome of the Brexit negotiations”.
The report said that while it means the country should avoid recession, “it puts Scotland slightly at the lower end of the economic table over the coming two years” – Wales is expected to see growth of 1.3 per cent and 1.2 per cent, while England will grow at 1.5 per cent and 1.4 per cent. Only Northern Ireland is expected to do worse than Scotland with growth of 1.1 per cent and 0.9 per cent.
UK economic growth held up better than expected in the six months following the Brexit vote, but growth slowed in the first half of 2017 as inflation rose sharply, squeezing household spending power.
PwC expects consumer spending growth to continue to be moderate in 2017-18 as inflation eats into real spending power and wage growth remains subdued despite record employment rates.
PwsC’s regional chair in Scotland, Lindsay Gardiner, said: “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. This year the best growth we expect any region – except for London – will see is 1.5 per cent and it is 1.4 per cent 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.”
PwC’s report also found that four areas of Scotland have experienced the biggest decline in house prices compared to other parts of the UK.
Inverclyde has seen a 19 per cent drop in prices since 2007, East and North Ayrshire a 17 per cent decline and West Dunbartonshire a fall of 13 per cent.
Shetland is the only area of Scotland to have seen a considerable rise in property prices, with an increase of 59 per cent placing it higher than some London areas.
PwC projects a slowdown in growth between now and 2020, with the average Scottish home costing £160,000, up from £139,000 in 2016.
“Housing transactions, which tend to be more volatile than prices, are where the uncertainty caused by Brexit has manifested itself most strongly,” PwC said. “Year-on-year the number of transactions have been down for 12 consecutive months.”
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules hereLast Updated:
Report this comment Cancel