Recent GDP figures paint a worrying picture for Scotland’s economy, showing a 0.5% contraction in November 2024 compared to the UK’s 0.1% growth.
This sharp downturn, particularly affecting professional and technical sectors, highlights the mounting challenges Scotland faces amidst tax increases and high interest rates.
The data raises concerns about potential job losses and economic strain, underscoring the divergence between Scotland’s economic performance and that of the broader UK.
Kevin Brown, savings specialist at Scottish Friendly, comments on this morning’s Scottish GDP figures: “Although the UK as a whole grew by 0.1% in November 2024, Scotland’s GDP has worryingly gone sharply into reverse in the same month, falling by 0.5%. Over the three months to November, the UK showed zero growth but, again, Scotland lagged with a -0.3% contraction. Worst affected in the latest figures are Scotland’s professional, scientific and technical services sectors which contracted by -3.5%.
“These figures are deeply worrying for Scotland as they reflect the significant challenge the economy faces as tax increases and persistent high interest rates bite down hard. Although the UK as a whole is struggling and the labour market is starting to finally look shaky, there are signs of real problems emerging north of the border as Scotland’s economy takes a battering.
“Households which have been hammered by inflationary pressures are now facing job losses as the economy takes the strain of higher interest rates. Scotland does not have independent rate setting powers so has to look to the Bank of England for measures to ease pressure on the economy.
“As tax increases take effect the expectation is that pressure is only going to mount from here. It is likely we’ll start to see movement on the Monetary Policy Committee (MPC) as nearly all the signs are there that lowering rates is a necessary measure to get the economy back on track.
“For households wondering what steps to take in such circumstances, the good news is that wages are still increasing ahead of inflation. Taking steps to ensure they have a rainy-day fund is essential, if possible. Beyond that when saving for the future, with rates set to fall households should consider investing for the long-term as an alternative.”
