Latest news with #FraserofAllander
The Independent
04-07-2025
- Business
- The Independent
Economic slowdown linked to global uncertainty amid Trump tariffs
A slowdown in growth in Scotland's economy is 'largely due to higher global uncertainty' – with experts saying this is linked 'particularly' to US President Donald Trump's trade tariffs. The Fraser of Allander Institute also highlighted a recent rise in inflation this year as having 'played a role' as the economy 'faltered'. Economics experts at the Strathclyde University-based think tank have now downgraded their forecasts for growth. Speaking as its latest quarterly economic commentary was published, institute director Professor Mairi Spowage said: 'After a strong start to the year, the Scottish economy has faltered in March and April and is essentially the same size in real terms as it was six months ago. 'Unfortunately, the wider business environment and global events are still taking a toll on businesses and consumers, which is having a dampening effect on spending and business investment.' The think tank now expects economic growth of 0.8% in 2025 and 1.0% in 2026 – which is a slight downgrade from its April forecasts of 0.9% and 1.1%. It noted Scottish real GDP grew 0.4% in the first quarter of 2025, compared to 0.7% in the UK as a whole. The think tank said: 'A pattern of lower growth in Scotland has persisted, leading to a weaker recovery from the pandemic than the UK generally.' Looking at the latest data, it found Scotland's economic growth had 'remained slow', with rises in the first months of 2025 having been 'partially offset' by decreases in March and April. The report said: 'The slowdown in growth this year is largely due to higher global uncertainty, particularly from the announcement of tariffs in the US and elsewhere. 'With the CPI (Consumer Prices Index) rate at 3.4% in May 2025 after staying below 3% throughout 2024, an uptick in inflation has also played a role.' The think tank said its latest forecasts 'reflect greater uncertainty and difficult economic circumstances'. It also noted that businesses had reported a slowdown of activity in the first quarter of 2025 compared to the same period last year. The report said this 'decline in activity may reflect the impact of increases to employer national insurance contributions as well as uncertain conditions, particularly from trade and tariff decisions taken by the US government'. It said the 'difficult conditions for business have been echoed in the labour market', with the think tank noting pay growth has been 'slow' and the number of employees has fallen 0.9% from last year. It also said there was 'some indication that the proportion of people living beyond their means in Scotland may have increased compared to this time last year' – but added other indicators of financial stability 'seem to be holding steady'. Deputy First Minister Kate Forbes said: 'It is clearer than ever that Scotland's economy is being impacted by challenging global trading conditions and uncertainty – conditions mirrored across the rest of the UK. 'We are taking ambitious steps to grow the economy by pursuing new investment, building export potential and driving and capitalising on the Scottish innovation at the forefront of many key global industries. 'But we are doing all of this without the full economic powers needed to fully address the issues facing Scottish businesses. We need decisive action from the UK Government to counter the damaging economic impacts of Brexit and business uncertainty. 'This includes reversing its decision to increase employers' national insurance contributions which, as the Scottish Chambers of Commerce has highlighted, is severely damaging business confidence, investment, growth and jobs.'
The Herald Scotland
04-07-2025
- Business
- The Herald Scotland
Scottish economy growth forecasts cut by think tank
It notes the growth forecasts have been 'revised down to reflect economic conditions in both the UK and the world economy, particularly given the weakening growth that we have seen in March and April'. Fraser of Allander is now forecasting the Scottish economy will grow by 0.8% this year and expand by 1% in 2026. In its previous commentary, published in April, it had predicted growth of 0.9% in 2025 and expansion of 1.1% next year in Scotland. The research institute said: 'Our latest forecasts reflect greater uncertainty and difficult economic circumstances.' It noted other forecasters had increased gross domestic product growth projections for Scotland and the UK next year, while cutting expectations for 2025. Fraser of Allander said of the reductions in its predictions for the Scottish economy for both years: 'This comes despite more upbeat projections from both the Scottish Fiscal Commission and the Office for Budget Responsibility, which have recently upgraded their expectations for 2026 whilst similarly revising down their GDP forecasts for 2025.' The research institute has held its Scottish growth forecast for 2027 at 1.1%. Read more Fraser of Allander noted the Scottish Fiscal Commission in May forecast the economy in Scotland would grow by 1.1% this year, before expanding by 1.8% and 1.7% respectively in 2026 and 2027. The Scottish Fiscal Commission had in December forecast 1.5% growth this year, with expansion of 1.6% and 1.4% respectively in 2026 and 2027. The OBR in March halved its forecast for UK growth in 2025 to 1%, having last October projected expansion of 2% for this year. It raised its prediction of UK growth in 2026 from 1.8% to 1.9% in March, while increasing its forecast of expansion in 2027 from 1.5% to 1.8%. Fraser of Allander said: 'Economic growth is now slowing compared to the start of the year and inflation has also edged up to 3.4%, after staying below 3% throughout 2024. 'The business environment is also showing signs of strain, with companies reporting cutting back on activities in the first quarter compared to last year, plagued by rises in national insurance contributions, which took effect in April, alongside uncertainty surrounding President Trump's trade tariffs. Indeed, pay growth and employee numbers are down, signalling potential weaknesses in the labour market.' Mairi Spowage, director of Fraser of Allander, said: 'After a strong start to the year, the Scottish economy has faltered in March and April and is essentially the same size in real terms as it was six months ago. 'Unfortunately, the wider business environment and global events are still taking a toll on businesses and consumers, which is having a dampening effect on spending and business investment.' João Sousa, deputy director of Fraser of Allander, said: 'The fiscal announcements by both governments suggest that there are significant economic challenges in the years and months to come for the UK and Scottish governments. 'Particularly from 2027-28 onwards, the choices of government look to become more difficult. Of course, this is the role of the government in power: but the difficulties of the UK Government this week show that events can quickly derail its plans.' Fraser of Allander said: 'Our forecasts demonstrate the continuing challenge for policymakers of combined slow growth and spending pressures. Through the second half of the year, we'll be watching the Scottish and UK budget processes closely to see how policymakers are balancing short-term pressures with long-term considerations.'
