Fraser of Allander Institute

Department of EconomicsFraser of Allander Institute (FAI)

Fraser of Allander Economic Commentary

Founded in 1975, the Fraser of Allander Economic Commentary is the leading publication on the Scottish economy and offers authoritative and independent analysis of the key issues of the day.

The Commentary provides in-depth analysis of the current performance and future prospects of the Scottish economy, including short- and medium-term forecasts for economic growth and the labour market.

The Commentary also provides a platform for the dissemination of high quality research on issues facing the Scottish economy. It publishes articles from leading experts in academia, industry, policy and the third sector.

The Economic Perspectives and Policy sections of the Commentary contains accessible, policy-relevant research and commentary on the Scottish economy and wider economic and public policy issues.

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Latest Fraser of Allander Commentary

March 2021: volume 45, number 1

The pandemic continues to take its toll on economic growth after an unprecedented year. The new variants and post-Christmas lockdowns have led to expectations for Scotland’s economic growth in 2021 being revised down, according to the latest Economic Commentary by the Fraser of Allander Institute at the University of Strathclyde.

In the Deloitte sponsored Economic Commentary, the Institute also sets out that expectations for growth in 2022 are stronger than previously forecast, building on the optimism that consumers feel on the back of a successful vaccine roll out.

With furlough schemes now in place until the Autumn, it is clear that the economy will need support past the point at which restrictions are lifted.

The forthcoming economic recovery could take many shapes, and policymakers in all levels in government will have a role in shaping the recovery.


Back issues

December 2020: volume 44, number 4

While many parts of the world continue to introduce new lockdown measures – there is tentative optimism for the year ahead, according to the latest Economic Commentary by the Fraser of Allander Institute at the University of Strathclyde.

As we speak, initial rollouts are beginning of vaccines that will aim to ensure that 2021 will be a better economic year for Scotland than 2020.

Despite this welcome news, it will take some time for the country to get to a point where significant restrictions can be eased. This will continue to have a particular heavy toll on key sectors in our economy, such as tourism and hospitality. Moreover, the roll out of a sustained vaccination programme across the world will take many months, meaning that the global outlook – crucial for Scotland’s exports and investment prospects – remains hugely challenging.

As a result, the ongoing economic crisis remains severe: there is still a hard recovery to come. With unemployment soon to rise, and a renewed squeeze on wages across the public and private sector, it will feel like Scotland is in a recession for some time yet.


This edition of the Fraser Economic Commentary also includes three articles

1.            “Scotland’s Budget Report 2020”, David Eiser

2.            “Estimating the Elasticity of Substitution between Capital and Labour”, Julija Harrasova

3.            “A guide to Scottish GDP”, Milan Marcus & Adam McGeoch

September 2020: volume 44, number 3

The Scottish economy is at a key crossroads in its recovery from the COVID-19 pandemic, with the outlook particularly uncertain, according to the latest Economic Commentary by the Fraser of Allander Institute at the University of Strathclyde.

The Institute points out that whilst a fragile recovery is underway, the economy is still well below levels of activity that we had before the start of the crisis.

On the upside, provided that the virus is contained, we could see growth continue to pick up as consumers and businesses gain confidence. However, even in this scenario, it is likely to be a slow recovery with the economy not returning to normal until a vaccine is rolled out at scale.

There are however many reasons to be much more pessimistic. The new restrictions, due to the surge in cases in recent weeks, are likely to further constrain the rate of growth. Many businesses who were already operating under significant stress are likely to suffer further under these new restrictions. With the scaling back of government support in the next few weeks, many of the negative economic effects of the crisis – some which have been hidden through initiatives such as the furlough scheme, the business bounce back loans and mortgage holidays – are likely to escalate.


Economic Perspective articles:

Scottish economy is now in its deepest recession in living memory

The Scottish economy is now in its deepest recession in living memory, according to the latest Economic Commentary by the Fraser of Allander Institute at the University of Strathclyde.

The Institute points out that whilst the depth of the collapse in GDP is largely artificial and entirely due to the lockdown, what matters is how quickly activity bounces back once the restrictions are lifted.

All signs are however, that there will be some scarring and it will take some time before the economy recovers to a ‘new normal’.

The Commentary considers a range of scenarios from a more optimistic scenario where confidence builds momentum, through to a more pessimistic scenario which includes a second wave of infection.

In the optimistic scenario, the economy is projected to take until the end of 2021, at the earliest, to fully recover lost output. In the pessimistic scenario, it could be 2024 before a ‘new normal’ is reached.

The Institute also points out that even when the economy returns to growth, the underlying structure of Scotland’s business base will be altered forever.

Economic Perspective articles:


Global health crisis will shape businesses for decades to come

The coronavirus outbreak has already led to a sharp economic downturn in Scotland; one that will undoubtedly change the shape of our economy in the long-run, according to the Fraser of Allander Institute.

In its latest Economic Commentary, the Institute says the virus outbreak represents an ‘unprecedented shock’ to the global economy that will trigger a recession, but that the collective efforts of business and policymakers is to ensure that this is – as much as possible – a ‘v-shaped’ recession, with activity picking-up once the public health crisis passes.

In this shortened Commentary, the Institute also assesses how different parts of the economy might be impacted. The report also highlights the impact on jobs and household incomes, with many families lacking sufficient savings to cover their bills for an extended period of time.

Read the latest commentary

General election provides moment of clarity amongst recent uncertainty – but debate over Scotland’s economic future likely to intensify in 2020.

The Conservative majority means that the UK will leave the EU at the end of January 2020. But SNP gains in Scotland raise prospect of renewed debate on second independence referendum

17 December 2019

The outcome of the UK General Election has resolved one element of uncertainty in the UK economic policy landscape – the UK will now leave the European Union on the 31st January.

However, any hope of a swift resolution to the recent period of uncertainty is likely to be dashed according to the latest Economic Commentary by the Fraser of Allander Institute at the University of Strathclyde, which is produced in partnership with Deloitte.

The nature of the UK’s future economic relationship with the EU has still to be resolved within just 12 months, whilst the divergence in election results between Scotland and the rest of the UK has fuelled calls in some quarters for a second independence referendum.

All of this comes at a time of ongoing weak economic performance.

The latest analysis by the Institute shows that the UK economy stagnated over the three months to October, with business investment remaining a key drag on growth.

New Scottish economic data is published tomorrow – covering the slightly earlier three month period to September – and it is likely to show that, whilst the Scottish economy has returned to growth (thus avoiding a technical recession), performance over the year as a whole has remained fragile and well below trend.

Professor Graeme Roy – Director of the Institute – said “2020 promises to be a year of further debate over the future of the Scottish economy.

“The outcome of last week’s election is only likely to intensify the debate over the prospects for a second independence referendum. For some, Brexit represents a ‘material change in circumstance’. For others, ‘once in generation’ still holds.

“As we look forward to next year, there are likely to be two parallel debates. One on the process surrounding whether or not a second referendum should take place. And the second, about the prospects for Scotland under different constitutional settlements.


Read the latest commentary

Two Economic Perspectives articles are also published alongside the Commentary. These are:


Moving toward a deal, but long-term challenges just about to start: Fraser of Allander Institute Economic Commentary 

Make or break for UK’s exit from EU in coming days – but uncertainty to remain for foreseeable future.

23 October 2019

The impact of Brexit uncertainty has cost the Scottish economy around £3 billion – relative to where it would have been – according to new research from the Fraser of Allander Institute.

In its latest Economic Commentary, supported by Deloitte, the University of Strathclyde-based research institute highlights how growth has remained sluggish over the past year with firms putting off investment as they await the outcome of the negotiations over the UK’s exit from the EU.

The Institute also points out that whilst it is possible that the UK’s exit from the EU will be finally ratified in the coming hours, days or weeks, this will not mark the end of the challenges facing Scottish businesses.

Professor Graeme Roy, Director of the Institute, said: “There are signs that Boris Johnson may be able to secure safe passage of his new deal with the EU, albeit perhaps not by the 31 October deadline, so that the UK will finally leave the EU three-and-half years from the Referendum.

“Securing a deal will help lift some of the fog of uncertainty that has hung over the Scottish economy in recent times. As a result, in the short-run, the economic outlook should improve. By avoiding a ‘no deal’ outcome, and all that would entail, growth is likely to move ahead of previous forecasts.

“However the nature of the ‘deal’, and in particular the intention to move to one of the ‘hardest’ forms of Brexit means that the long-term challenges for the Scottish and UK economies will be considerable.


Read the latest commentary

Three Economic Perspectives articles are also published alongside the Commentary. These are:


Scottish economy remains resilient, but Brexit uncertainty continues to erode long-term growth prospects 

Risks from new Fiscal Framework likely to hit Scottish Budget in years ahead

26 June 2019

The Scottish economy may have grown by its fastest rate in two years in the first quarter of 2019, but the risks to Scotland’s growth prospects have not gone away, says the University of Strathclyde-based Fraser of Allander Institute.

In its latest Economic Commentary, supported by Deloitte, the research institute highlights how much of the recent up-pick in growth is likely to have stemmed from firms implementing ‘no deal’ contingency plans. Underlying growth – particularly in key sectors of the economy – remains fragile.

Professor Graeme Roy, Director of the Fraser of Allander Institute, said: “Three years on from the Brexit Referendum, we still have little clarity over the timing or format of the UK’s departure from the EU.

“Given the scale of the challenges that a no deal Brexit might bring, it is no surprise that businesses are taking matters into their own hands by rolling-out contingency plans.

“Much of the Brexit debate has focussed upon the potential dislocation of trade patterns. But arguably an even greater challenge, particularly over the longer-term, are the implications for Scotland’s population.

“Our analysis shows that a significant amount of the long-term growth gap between Scotland and the rest of the UK can be explained by differences in population growth.

“Should Brexit make migration to Scotland more difficult, or less attractive, then this could have serious implications for key sectors and the economy at large.”

Read the latest commentary


Economic Perspective articles:


Brexit uncertainties masking longer term challenges to the Scottish economy

17 April 2019

The decision to extend the deadline for the UK's withdrawal from the EU has provided some welcome temporary respite from recent months of heightened economic uncertainty, but only for a short while with the range of scenarios as wide as ever, says the Fraser of Allander Institute.

In its latest Economic Commentary, supported by Deloitte, the University of Strathclyde-based research institute also argues that with Brexit dominating the headlines, important questions about the future longer-term trajectory of the Scottish economy are being crowded out.

Today's report lays out different scenarios for growth in Scotland over the next few years. These include scenarios ranging from a disorderly exit from the EU, in which case Scotland is likely to enter recession, to a scenario where confidence returns, unlocking business investment and boosting the economy to nearer trend growth.

The Institute’s central forecast, based on an orderly departure at some point in 2019, predicts growth of 1.1% in 2019 and 1.4% and 1.5% for 2020 and 2021.

The report shows that economic growth has remained steady over the course of 2018, with growth being fairly broad based, employment at a near record high and unemployment at a record low.

However, critically, earnings and productivity growth remain weak which present challenges for Scotland's long-term growth prospects.

Read the latest commentary

Economic Perspective articles:

A smooth Brexit transition crucial for Scotland’s economy

The Scottish economic growth in 2018 is on track to be at its highest rate since 2014, according to the latest economic commentary.  The Institute predicts growth of 1.4% in 2019, 1.5% in 2020 and 1.4% in 2021 – presuming the UK secures smooth transition from the EU.

A disorderly Brexit remains the biggest threat to Scottish jobs and growth.  The Bank of England have set out a ‘worst-case’ scenario which could see the UK economy shrink by around 8% from 2019.

To put that in context, this would be around double the size of the recession Scotland witnessed during the financial crisis, and would be equivalent to an extra 100,000 people unemployed in Scotland.

Economic Perspective articles:


Upturn in Scottish economic growth but a smooth Brexit transition is vital to avoid derailing progress

Securing a smooth Brexit transition is 'vital' to protect Scotland's growing economy – even if that means extending the Article 50 negotiation period.
In the latest Economic Commentary,  Scottish GDP grew by 0.5% in the second quarter of 2018. This is in line with its prediction of a more optimistic outlook for 2018 and is the second quarter in a row Scotland has outpaced UK growth.
Despite these positive figures we emphasize the continuing fragility of the Scottish economy and stress the importance to the UK economy of securing an orderly transition upon leaving the EU in March 2019 to avoid potentially damaging disruption to business.

Economic Perspective individual sections:

Monetary and fiscal policy in a newly independent Scotland 

Highlighting the need for policy coordination 

Reappraising Scotland’s exports and their geographies 


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