World Economy

Scotland Warned of Stagnation

Scotland Warned of StagnationScotland Warned of Stagnation

Consumer spending power in Scotland is expected to remain stagnant for at least another three years and deal a further blow to hard-pressed retailers and businesses, tax watchdogs have warned.

The independent Scottish Fiscal Commission said high inflation and slow wage growth meant disposable household income was unlikely to rise until 2020/21, SNA reported.

The SFC’s economic and fiscal forecasts, published to accompany this week’s draft budget for 2018/19, predicted Scottish GDP growth lagging behind the UK. It said: “Real household disposable income is not expected to see any growth until 2020-21 because of a combination of slow wage growth, very limited employment growth and inflation. Growth in real household incomes will start to strengthen gradually from 2020 onwards as wage growth starts to increase.”

The SFC also predicted a £6 million ($8 million) boost to first-time homebuyers in the budget would have little effect other than to fractionally increase the price of properties. It forecasted growth would average 0.9% to 2022, compared with the 1.4% forecast by the Office of Budget Responsibility for the UK as a whole.

The “subdued” outlook suggested tax revenues would be £2.1 billion lower by 2022 than the SNP government had estimated in February. Tax revenues next year alone are down £205 million compared with February, more than the £164 million Finance Secretary Derek Mackay plans to raise through higher income tax.

Tory MSP Murdo Fraser said Scotland was heading for a “Sturgeon slump” and a £2 billion “black hole”. He urged the government to dump its “Nat tax” and pursue economic growth instead.


Add new comment

Read our comment policy before posting your viewpoints