Scotland’s growth forecast has been downgraded to a 'failure’ economy

There are signs of „stuttering” growth in the Scottish economy, with companies delaying or canceling investment amid high interest rates, according to new research.

The latest quarterly economic commentary from economists at the Fraser of Allander Institute suggests growth is likely to moderate.

It forecasts GDP growth of just 0.2% this year, a downward revision from the firm’s previous estimate.

Growth will be 0.7% in 2024 and 1.2% in 2025.

Researchers said the high interest rate and high inflation environment will last longer than initially thought.

Institute director Professor Mairi Spovage said: „Growth in 2023 has presented a mixed picture so far, while the end of 2022 is much better than we expected – predictions of a slowdown are thankfully unfounded.

„Despite this, many are delaying or canceling investment due to the high interest rate environment and broader economic uncertainty, and it is clear that businesses do not feel that conditions are good right now.”

Deloitte provides quarterly economic commentary.

Angela Mitchell, the firm’s senior partner for Scotland, said: “This quarter’s commentary shows a starkly mixed outlook for our economy and, accordingly, business and consumers.

“In particular, the rate at which businesses delay or cancel investments is high.

“This resonates with findings from our recent CFO (Chief Financial Officer) survey, which found that CFOs are focused on reducing leverage and see capital spending as a low priority.

„However, the commentary is encouraging that there are signs that the investment reluctance is temporary.”

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