Scotland’s GVA Growth Expected to Slow in 2024, but Long-Term Prospects Remain Positive: EY ITEM Club Forecast

Scotland’s GVA Growth Expected to Slow, But Long-Term Prospects Remain Bright

Scotland’s Gross Value Added (GVA) is projected to rise at a slower pace than previously predicted this year, according to the latest EY ITEM Club Scottish Spring forecast. The forecast shows a growth rate of 0.4%, down from the earlier estimate of 0.7%. Despite this, economists remain optimistic about the country’s longer-term prospects.

The report also indicates that the UK economy is expected to experience weaker growth than initially anticipated, with a forecasted growth rate of 0.6%. However, the 2025 forecasts for Scottish GVA have been revised slightly upwards to 1.7%, compared to 1.4% in the previous quarter, with further sustained growth expected in the future.

While Scotland’s economic growth is expected to lag behind the UK, which is forecasted to grow by 1.8% annually in 2025 and 2026, rising to 1.9% in 2027, there is still optimism about the country’s economic outlook.

The EY report highlights a softening in the labor market demand, with indicators such as falling employment, fewer job adverts, and easing pay growth. Despite this, the report predicts a modest rise in unemployment to 4.2% this year, with a forecasted return to 4.0% in 2025.

EY Scotland managing partner Ally Scott emphasized the need for a policy reset from new political leadership to boost the economy. While the forecast indicates weak GVA growth for this year, there is momentum building for a brighter outlook in 2025 and beyond.

The report also points out that certain sectors, such as professional, scientific & technical services, and the administrative & support sector, are expected to see stronger employment growth in the future. Collaboration between industry and government is seen as crucial to accelerating a more vibrant and sustainable economy in the long term.

Overall, while Scotland’s GVA growth may be slower than expected this year, there are positive signs for the future, with opportunities for growth in key sectors and the potential for a more robust economy in the years to come.