EY Scottish ITEM Club Summer Update 2017
Stimulating business investment could help revive stagnating Scottish economy
- 2017 is set to be a year of below par growth in Scotland, with GDP forecast to reach 0.9% – while the UK is forecast to grow by 1.8%
- Consistent with weak economic activity, employment is expected to continue to fall
- But manufacturing provides silver lining for Scotland’s economy in 2017
- Business and Government can work together to de-risk investment, build confidence and drive economic growth.
The EY Scottish ITEM Club 2017 Summer Update highlights that Scotland’s economy is expected to deliver below par growth in 2017 as previously buoyant consumer spending fades and businesses remain reluctant to invest.
The Scottish economy faces a challenging year in 2017 with growth predicted to reach 0.9% – half the UK’s expected growth for the same period. With Scotland’s economy showing signs of slowing faster than the rest of the UK, the report calls for business and government to work harder and smarter to achieve sustained growth.
As flagged in previous EY Scottish ITEM Club reports, one factor for Scotland’s poor performance is the ending of the outsized contribution to GDP growth from construction as many of the big ticket public sector funded infrastructure projects near completion. With consumers also under pressure, this means stronger growth will require higher levels of businesses investment.
The economy needs to rebalance and shift away from a reliance on public-funded major infrastructure projects. Sector diversification is also needed to help move away from an over reliance on oil and gas, construction and financial services.
Strategies to stimulate growth
Stimulating business investment in Scotland both in terms of physical assets and skills could deliver extensive, long-term economic benefits. This presents an opportunity for public and private sectors to define a new way of working together in order to drive further economic growth.
Business investment is imperative to the Scottish economy’s long-term health and growth, but is currently subdued. Government can help de-risk investment by supporting development of the skills and infrastructure businesses need so companies can feel confident of maximising their investment.
A collaborative approach between public and private sectors will ensure projects, proposals and investments are prioritised to deliver the biggest return in terms of skills, jobs, economic benefits, productivity, innovation and competitiveness.