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Tough times for Scotland

1 Dec 08

Scotland will plunge into recession next year, according to the authoritative analysists Fraser of Allander Institute

The institute predicts the economy will spend years in the doldrums.

The latest Allander forecast warns that Scotland could be in for a grim period as the economy crashes into reverse in 2009 then grows at below trend rates into the next decade.

 

The institute, part of Strathclyde University, warns that the slowdown will be accompanied by a sharp rise in unemployment as up to 116,000 jobs are cut in the next two years.

 

After a long period with a buoyant labour market, Fraser of Allander says unemployment in Scotland could jump to 7 per cent in 2010, from around 4.4 per cent in 2008.

Sponsored by PricewaterhouseCoopers, the analysis provides a grain of comfort with the prediction that Scotland should only have to endure a year of falling output. In contrast, the last UK-wide recession persisted through 1980 and 1981.

Professor Brian Ashcroft, of Strathclyde University, noted that the Bank of England and ministers had acted quickly to try to address the current crisis.

 

However, after a period in which the trend annual growth rate of the Scottish economy has accelerated, to almost 2 per cent, Fraser of Allander warns that Scotland could be hit harder than other parts of the UK by the slowdown.

The property market is in better shape in Scotland than south of the border but Scotland’s crucial financial services industry has had a battering. Fraser of Allander predicts the economy will grow by 0.72 per cent to 0.81 per cent this year – in June, it predicted 1.9 per cent.

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Fraser of Allander Institute | Professor Brian Ashcroft | Frank Blin | Paul Brewer | PricewaterhouseCoopers | economy

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