World Economy

Scotland Warned of Recession

Scotland Warned of RecessionScotland Warned of Recession

A leading economic forecaster has warned that Scotland may fail to avoid a recession in the coming months as the economy continues to slow down.

The University of Strathclyde’s Fraser of Allander Institute has revised down its growth forecast for 2016 to 1.4%, whereas in March it expected 1.9%. It has also reduced its forecast for 2017 from 2.2% to 1.9%, BBC reported.

It said growth would slow further because of slow investment growth and a worsening demand for Scottish exports.

The report also cited the continuing effects of the fall in the price of oil on household incomes and spending, and a general slowing in household spending.

Prof Brian Ashcroft, from the Fraser of Allander Institute, said: “The Scottish economy came within a hair’s breadth of recession last year and, with little improvement recently, may fail to avoid a recession in the coming months.”

The quarterly report adds further weight to recent evidence that the Scottish economy is slowing.

Last week, the EY Scottish Item Club said the economy was slowing up more than previously expected. It estimated growth of only 1.2% for 2016, whereas last December it expected 1.9%.

Scotland’s chief economist also warned earlier this month that the economy was set to continue to grow slowly.

The Fraser of Allander Institute said Scotland was now relying solely on the service sector for growth as the contribution of construction, driven by infrastructure spending, had now peaked—albeit at a high level of activity.