Scotland’s economic growth is being fuelled by a combination of capital investment – particularly in infrastructure – and consumer spending, according to a respected think-tank.
But the latest economic commentary from Strathclyde University’s Fraser of Allander Institute, sponsored by PwC, also says threats to recovery remain.
It warns that the UK Government continuing or even ramping up austerity measures and the growing threat of a Greek exit from the euro may have a damaging impact north of the border.
Strathclyde University economist Brian Ashcroft adds: “In his forthcoming Budget, it is crucial that the chancellor takes action to minimise the threats to the recovery by encouraging productivity and real-wage enhancing investment.
“He should also consider increased incentives to exporters and, at a minimum, a slowing in the pace of his fiscal consolidation plans.”
Fraser of Allander also warns that sustainable recovery is being threatened by a combination of unbalanced growth that relies too much on household spending and the UK’s overall weak trade performance.
Professor Ashcroft says: “We should not underestimate the threats to the recovery from rising household debt, little growth in real wages, the dark shadow of further austerity and the rising possibility of Greece leaving the euro.”