Economy

Scottish economy shows ‘signs of apathy’ as businesses hold back investment


Growth in the economy has been faltering over 2023, with a high interest rate environment and wider economic uncertainty leading to investment being delayed or cancelled, according to the Fraser of Allander Institute.

Its quarterly Economic Commentary, sponsored by Deloitte, sees the University of Strathclyde economists forecasting growth of 0.2% in 2023, 0.7% in 2024 and 1.2% in 2025.




For 2023, this is a revision down from the institute’s previous set of forecasts in June, as data for the year to date has been much weaker than expected.

The forecasts for 2024 and 2025 have not changed since June.

The most recent data on inflation, which held steady at 6.7% in September, shows that the high inflationary and interest rate environment is likely to persist for longer than previously thought – therefore it is likely that there are more risks to the downside for these forecast numbers than when they were presented in June.

Professor Mairi Spowage, director of the institute, said: “Growth in 2023 so far has presented a pretty mixed picture.

“While much better than we were expecting at the end of 2022 – with the predictions of recession proving thankfully unfounded – it is clear that businesses are not feeling that conditions are great right now, with many delaying or cancelling investment due to the high interest rate environment and wider economic uncertainty.”

Angela Mitchell, senior partner for Scotland at Deloitte, agreed that the rate at which businesses are delaying or cancelling investments is high.



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