Belfast Telegraph

Friday 26 December 2014

Concern over future 'damaging Scotland'

Scotland's referendum will take place on September 18
Scotland's referendum will take place on September 18

Uncertainty over Scotland's future is impacting on the country's economy, which is under-performing compared to the rest of the UK, a new report suggests.

But if September's referendum results in a vote to stay in the UK, then a period of where it outperforms the UK economy "may swiftly follow as activity and investment that was postponed due to uncertainty about Scotland's future is undertaken," according to research firm Capital Economics.

Its most recent UK Cities and Regions paper said: "It has become clear that uncertainty about Scotland's future inside the UK is weighing on its economy."

While figures this week showed the Scottish GDP was up by 1% in the first quarter of 2014, the report said "this largely reflected a bounce-back from a weak performance" in the previous three months, adding that the annual growth of 2.6% "remained below the UK's 3%".

Other indicators also suggest "output has grown more slowly in Scotland than in any other region of the UK for the third month in a row", the report said, adding this was "perhaps reflecting concerns about the looming independence vote".

It also pointed out the unemployment rate north of the border had risen to 6.9%, arguing that the growth in employment "appears largely down to weak employment a year ago".

Meanwhile the strength of the housing market recovery is "unclear", with the report noting that according to the Office for National Statistics house prices had fallen for the second month in a row in May.

But it stated: "Nonetheless, if the opinion polls are right and Scotland votes to remain part of the UK, then a period of out-performance may swiftly follow as activity and investment that was postponed due to uncertainty about Scotland's future is undertaken."

Scotland's referendum will take place on September 18.

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