Today the Scottish Government released the 2018 ‘State of the Economy report.’ Despite Scottish business confidence being near an all-time low, the report predicts that Scotland’s economy is expected to grow in 2018, despite the ongoing uncertainty over Brexit.

Based on independent forecasts, the outlook signals positive GDP growth for 2018 of between 0.7% and 1.4%. The Oil and Gas sector is set to play a key role in this due to a stronger external environment. In the third quarter of 2017, Scotland’s oil and gas industry was up 43% (£2.6 billion).

Key takeaways

• Scotland’s economy continued to grow, despite challenging economic conditions, into the second half of 2017 albeit at a slower rate.
• Scotland’s labour market near record levels. People in employment has risen by 59,000 over the past year with 80% of the increase coming from full-time employment.
• Oil and Gas sector to drive productivity growth as the labour market remains tight.
• The pick-up in inflation continues to weigh on real wage growth and as a result Scottish consumer sentiment remains subdued, it weakened further in the final quarter of 2017.
• Uncertainty over Brexit poses long-term challenges for productivity growth. Particularly if business investment is constrained and tighter immigration results in skills deficit both of which could lead to a decrease of inward investment to Scotland.

Economy Secretary Keith Brown MSP, said: “While growth has been more modest than we would have liked, we’ve seen growth in the services sector and a welcome return to growth in the production sector, which continues to be supported by the pick-up in economic sentiment in the oil and gas sector.”

Brown went on to cite the uncertainty of Brexit as a barrier to further growth and calls on the UK government to provide greater certainty the EU exit process.

£10m Boost for South of Scotland

This positive prediction comes on the back of last week’s press release from the Scottish Government announcing a new partnership, between public and private sectors partners, to boost economic development in the South of Scotland.

The South of Scotland Economic Partnership will be supported by £10m from the Scottish government. It will also receive business experience from relevant industry sectors, with input from representatives from education, the third sector and the public sector.

November 2017,  Brown confirmed Professor Russell Griggs OBE as private sector chair of the body, and Borders Council’s Rob Dickson as the public sector lead.

Professor Griggs OBE said: “I am pleased to be working with people with such a wide range of skills, expertise and commitment to the South of Scotland. The Partnership is now ready to bring a fresh approach to economic development to the South. We’re ambitious for the area and determined to make early progress.”

The financial injection from the Scottish government, which was announced in last month’s budget, will pave the way for a dedicated enterprise agency for the region. Such an investment demonstrates the government’s proactive approach to bolstering the Scottish economy.

The full membership of the South of Scotland Economic Partnership

Chair of the Partnership – Professor Russel Griggs, OBE

Members bringing private sector expertise

Tom Barrie, Currie Solutions

Alistair Cameron, Scotmas Ltd

John Fordyce, Three Stills Company Limited

Paula Ogilvie, Borders Book Festival and Bright Sparks Services

Tracey Roan, Roan’s Dairy

David Sulman, UK Forest Products and Scottish Timber Trade Association

Lorna Young, Indigo Works

Members bringing third sector expertise

Amanda Burgauer, Scottish Rural Action

Helen Forsyth, Berwickshire Housing Association

Fred Murray, Old Luce Community Trust

Members bringing further and higher education expertise

Barbara Kelly, Crichton Leadership Group

Tony Jakimciw, Borders College