According to the Bank of Scotland’s latest index of leading indicators, the Scottish economic recovery seems favorable to run out of momentum at the end of the third quarter of this year. The index suggests the Scottish economic expression is now past the pinnacle, therefore improving the chance of a double dip recession.
Several sectors within the Scottish economy are demonstrating growth, although the amount of growth doesn’t seem strong enough to fight against governmental austerity measures yet to take effect.
Manufacturing is a bright spot as new order levels are rising. Demand in Scotland’s companies has increased in each of the past eight months. Exporting numbers should also keep going up.
The sectors yearning to see more growth are the housing market and the financial market.
Donald McRae, chief economist at Bank of Scotland, weighed in on the issues at hand, saying: “The Scottish economy emerged from recession at the end of 2009 but growth then stalled in the first three months of this year.
“The Bank of Scotland PMI showed that the Scottish private sector has been growing for 13 successive months, beginning in July of last year.
Mr MacRae continued: “This latest update of the Index of Leading Indicators shows the tentative recovery slowing in autumn as both consumer and business confidence continue to be dented by wide- spread concerns over the effect on jobs and contracts of future cuts in Government spending.”
By comparison, figures of the UK Government revealed output surged by over 1 per cent during the second quarter which is the fastest in four years. Although, cuts in spending later this year are predicted to cause massive job losses.
Another set of concerning data within the Scottish economy is that travel, tourism, and leisure currently outpaced business and financial services.