SCOTLAND’S Finance Secretary has welcomed the “tremendously good news” that the country’s economy is expected to grow much faster than previously projected.
A new report from the Scottish Fiscal Commission, which produces Scotland’s official economic forecasts, revised growth upwards from its previous projections.
The body noted that since January this year “the public health and economic outlook has significantly improved”, with the economy recovering “more rapidly” due to Covid restrictions being lifted.
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The commission’s chair, Dame Susan Rice, commented: “We now expect the Scottish economy to grow by 10.5% in 2021‑22, mainly fuelled by household purchases as consumption reverts to pre‑pandemic levels, supported by higher income households who were able to save during the lockdowns.”
However, the commission also had a warning for the Government over social security spending, with the new Adult Disability Payment soon to replace the UK Government’s Personal Independence Payment.
“We expect higher spending as a result of new social security payments introduced by the Scottish Government,” Rice said. “These new policies are a long-term commitment so finding the budget to fund them will be a challenge not just for this government but also for those of the future.”
Forbes welcomed the report, writing: “The SFC is forecasting a much faster growth in Scotland’s economy vs previous expectations.
“This is tremendously good news, and illustrates the underlying resilience and strengths of Scotland’s economy.
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“Fair and sustained economic growth is essential for continued investment.”
However, she had a warning too. “The SFC highlight that late, large changes by the UK Gov in the financial year are v difficult for us to manage,” she added.
“Our budget can be revised up or down, subject to what the UK Gov actually spend. That means that funding can be clawed back - as late as a few weeks before year end.”
Other key figures included with the SFC report show that nominal earnings and income tax revenues have both been revised upwards.
The full report can be read here.
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