Businesses Hope For Some Clarity And Stability After Recent Political Turmoil

27th October 2022

It has been yet another turbulent few months for the UK economy, with recent political turmoil adding pressure to an already uncertain business environment.

Rising inflation coupled with significant political and economic uncertainty means many households and firms are facing increasingly tough financial decisions.

Recent estimates suggest the Scottish economy shrank by 0.2 per cent in July, the second consecutive month of negative growth, following no growth in the second quarter of 2022.

This was primarily driven by a fall of 0.3% in the services sector, which accounts for around two-thirds of the Scottish economy and tends to be the section of the economy most supported by consumer spending.

This was of little surprise, however. In our latest economic commentary, published in partnership with Deloitte, we forecast that the economy would contract from Q3 of this year, which is likely to persist until at least the first quarter of next year. The overall growth picture for 2023 is also forecast to be negative.

This means that Scotland is likely already at the start of a recession (defined as two quarters of negative growth in the economy).

This was similar to the UK economy, which shrank by 0.3% in August 2022 despite growth of 0.1% in the previous month.

Read the full article from the Fraser of Allender Institute HERE