Publication - Research and analysis

State of the economy: February 2020

Report produced tri-annually by the Chief Economic Adviser to provide a picture of the Scottish economy in an international context.

GDP growth was flat in Q4 2019.

UK GDP growth was flat (0.0%) in Q4 2019, slowing from 0.5% growth in the third quarter.
In 2019 as a whole, GDP grew 1.4%, slightly up from 1.3% in 2018.
In Q4 2019, Services growth (0.1%) and Construction growth (0.5%) was offset by a contraction in Production output (- 0.8%).
GDP and business survey data suggest that there was stockpiling ahead of the October Brexit deadline, but to a lesser extent than for the March deadline.

Labour market remains strong in Sep-Nov 2019.

The UK employment rate rose over the year to 76.3%, its highest on record, with 32.9 million people in employment.
UK unemployment remained at 3.8%, its lowest rate since 1974.
The inactivity rate fell over the quarter and year to 20.6%.
GB regular pay continued to strengthen into the second half of 2019 growing 1.8% over the year to November.
Labour productivity grew by 0.1% over the year to Q3 2019.
Inflation fell notably in the second half of 2019.
CPI inflation fell to 1.3% in December 2019, having risen to 2.1% in July.
Decreasing inflation in 2019 was largely driven by a falling contribution from energy prices.
The Bank of England forecast inflation to remain below target in the short term before returning toward 2.0% in 2022.

GDP growth is forecast to pick up slightly in 2020.

The BoE forecast GDP to pick up in the short term reflecting an easing in uncertainty and strengthening business activity and investment intentions.
Longer term, the labour market is expected to remain tight, while weak productivity growth and transition to a new UKEU trade relationship is forecast to weigh on output growth.

UK GDP Growth