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2014 performance to be strongest since before recession. 

Scotland’s economy has continued to strengthen over the first half of 2014 and is forecast to have its strongest year of growth since 2007, according to the Scottish Government’s latest State of the Economy report published recently.

Against a backdrop of two years of sustained expansion, many components of the Scottish economy have now surpassed, or are moving back towards, pre-recession levels.

The report also notes that challenges remain in the adjustment process and external environment, but the overall picture is of the economy continuing to strengthen and there is now a more confident outlook for 2014 and beyond. 
Chief Economist Dr Gary Gillespie’s report also highlights:

• The 1.0% expansion in the Scottish economy in the first quarter of this year moved output beyond pre-recession levels, and the underlying data, trends, and outlook indicate that 2014 will result in Scotland’s strongest year of growth since 2007.

• The wider improvements have been reflected in the labour market. Employment has continued to rise and supported by a more positive outlook more people have moved into the labour market to look for work, boosting participation rates. 

• There are of course issues and challenges remaining. These include: the extent of rebalancing by households and across the wider economy; the pace of growth in key external markets; the degree of labour market utilisation and the outlook for labour productivity and wages; and, the as yet uncertain response to the gradual normalisation of interest rates and monetary policy as the recovery continues. 

• Whilst such issues will influence the pace and shape of the recovery over the medium term, the overall economic outlook is generally upbeat and the more stable economic environment and growing confidence should support a sustained period of growth.

Commenting on the report, Cabinet Secretary for Finance and Sustainable Growth John Swinney said:

“I welcome the Chief Economist’s report, which shows that the economy has shifted from recovery into expansion mode and this is set to continue throughout 2014 and into 2015. This is great news for business and for hard working people across the country.

“The most recent GDP forecasts also point to a continuation of an improving economic performance. This follows on from recent statistics which show employment in Scotland is at a record high and Scotland’s GDP has grown 1 per cent over the last quarter.

“The recovery in the Scottish economy is now well-established, however challenges remain, and that is why the Scottish Government is doing everything within its currently devolved powers to support growth and to reduce inequalities.

“With the full powers of independence we could do even more. Independence would give us the opportunity to set policies on taxation, innovation and labour market regulation – securing stronger levels of economic growth and job creation from which all the people of Scotland could benefit.”

Notes To Editors

The report is available at: http://www.scotland.gov.uk/Topics/Economy/state-economy/latestSofE