The Scottish economy is growing but at a rate much slower than the overall UK level. We accept that the drag on the economy is largely due to the effect of the falling oil price and production was flat last year too due to difficult conditions facing manufacturing and production in general. So is there a lot to feel negative about then? Perhaps not, despite a pretty tough economic backdrop, employment in Scotland has reached record levels. The Office for National Statistics (ONS) said that 21,000 more Scots were in work, compared to the previous quarter, bringing the total to 2,631,000. Scotland can therefore boast about having the highest employment rate within the UK and can take confidence from the fact it is outperforming England, Wales and Northern Ireland overall!
Employment in Scotland might be higher than pre-recession times, albeit a feat achieved south of the border for over 12 months ago now, and unemployment rates falling to levels not seen since summer 2014 (which is very positive news) but there is still more to do. With more tax-raising powers about to be devolved to Scotland, the performance of the economy north of the border will become even more important. However, the signs are good and it’ll be interesting to see further down the line if Scotland can maintain these levels but which sectors will benefit most from these employment figures?
Despite significant challenges these positive growth figures in the Scottish economy are encouraging given the strong headwinds and, candidates seeking their next career move may want to look towards the service sector which accounts for around three quarters of the output of the economy. It has continued to grow by 0.4% over the quarter and 0.7% over the year. Manufacturing contracted by 1% in Q3 albeit there was sub-sector growth within that of 2.7% in food & drink, but Construction expanded by 1% and 17.3% over the year. Candidates with skills relevant for the construction industry should note that over the last two years construction has been one of Scotland’s primary drivers for growth, a good sign for employment in the sector which is an area where firms have experienced difficulties in recruiting.
The repeated rising of oil figures, had Scotland voted yes to independence, would now be an even more emotive topic given the price of oil is a matter of huge concern for the Scottish economy, particularly in the North East, businesses in oil are announcing large job losses across Scotland over a sustained period during the next two years. Due to the oversupply around the world, oil prices dropped to less than half from its highest value of $110 (*£77) a barrel in June 2014 to $48 (*£34 ) a barrel by January 2015 and close $30 (*£21 ) a barrel in January 2016. Some commentators have suggested this might not be the lowest, we’ll see.
Forecasts for the UK economy as a whole, predict around 2.3% growth in 2016 and researchers at the Fraser of Allander Institute have forecast that the Scottish economy will grow by 2.2% in 2016. This would appear to be good news for the Scottish job market but it has been suggested that the Scottish economy has begun to diverge quite markedly from the UK and this is seen as a cause for concern that needs to be addressed. This may well turn out to be true but first, let’s see how we perform during the year ahead.
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*Exchange rate (8/3/16) = $1 = £0.70