World Economy

Infrastructure Investment Boosts Scottish Growth

Infrastructure Investment Boosts Scottish GrowthInfrastructure Investment Boosts Scottish Growth

Scottish output growth is being fuelled by a combination of capital investment–particularly infrastructure spending–and consumer spending, according to the latest Economic Commentary from the University of Strathclyde’s Fraser of Allander Institute.

It outlined forecast for GDP growth at 2.5% in 2015, 2.3% in 2016, and 2.3% in 2017; a slight downward revision from its March 2015 forecasts, NewsNow reported.

However, threats to recovery remain, the report sponsored by PwC warned. These include the UK government continuing, or even tightening, planned austerity measures in the forthcoming budget on July 8, and the growing threat of a Greek exit from the euro with the risk of contagion to other economies including Scotland.

Brian Ashcroft, Emeritus Professor of Economics at the University of Strathclyde, said: “In his forthcoming budget, it is crucial that the chancellor takes action to minimize the threats to the recovery by encouraging productivity and real-wage enhancing investment. He should also consider increased incentives to exporters and, at a minimum, a slowing in the pace of his fiscal consolidation plans.”

The Institute also warns that sustainable recovery is being threatened by a combination of unbalanced growth that relies unduly on household spending that depends mainly on rising and potentially unsustainable personal debt, and the UK’s overall weak trade performance.

The report which was published Thursday, outlines a number of positive influences on the Scottish economy that are collectively stimulating demand for Scottish goods and services.

Infrastructure spending, with projects such as the Forth Road Bridge and M8 completion, are complemented by a steady stream of foreign direct investments, with over 80 inward investment projects coming to Scotland in 2014.