Scotland’s economy is expected to move beyond 2008 pre-recession levels of output during 2014.
A report published today says growth in gross domestic product (GDP) – the most common measure of economic performance – is on course for levels not seen since before the onset of the financial crisis.
It also highlights the link between rising GDP and the prospects for higher wages and new jobs.
Gary Gillespie, Scotland’s chief economist, says “real” wages – adjusted for inflation – should start to increase for the first time since the global credit crunch sent western economies into reverse.
He adds: “Economic recovery in Scotland has continued through 2013, bringing with it a boost to household and business confidence.
“As in the rest of the UK, sustaining the recovery in Scotland into the medium term will require an improvement in underlying competitiveness, linked to a sustained pick-up in productivity and real wages – the underlying drivers of household income and consumption.
“Nevertheless, with the strengthening in output and the labour market over the year and the return of confidence across sectors, recent Scottish output forecasts have been significantly revised upwards.
“Overall, there is a more positive outlook for 2014 and, with a supporting external environment, indications are that Scotland’s recovery will continue to gain momentum in the forthcoming year.”
The Scottish Government’s State of the Economy report backs up the positive outlook delivered by Westminster in its most recent GDP forecasts for the UK.
Office for Budget Responsibility figures showed expectations for a 2.4% rise in GDP next year after a 1.4% jump in 2013.
Mr Gillespie says improving economies in the UK, US and eurozone nations were also good news for Scotland, as these were the country’s most important trade partners.
But he also warns that firms in certain industries may face “specific constraints”, while some households may encounter challenges if their economic circumstances fail to match the improvement in the wider economy.
In addition, he says the temporary closure of part of Ineos’s Grangemouth refinery and petrochemical plant could have an impact on Scottish GDP next year.
Ineos threatened to close the petrochemical side of the business but changed its mind after the Unite union accepted changes to pay, pensions and other terms and conditions.
“The closure for part of Q4 would be expected to exert a downwards impact on Scottish production sector output in the final quarter (of 2013), says Mr Gillespie, adding: “Further impacts might become evident in subsequent quarters in the form of a bounce-back in production sector output.”
Finance Secretary John Swinney said last night there would will be no let-up in Holyrood’s commitment to securing economic growth.
He added: “This is why in this spending review period we are investing £10billion in capital projects, building homes, schools and facilities to support the economy.”
Comment, Page 28