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.

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United Kingdom Summary

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

UK Labour Market

UK Manufacturing: Stock building

UK CPI Inflation and Interest rate



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