Scottish Economy Falls Behind Rest of U.K.

According to the University Fraser of Allander Institute, Scotland’s economy will grow to 1.9 percent for 2015, a downgrade from a previous estimate of 2.5 percent. Scotland will continue to fall in 2016, but analysts expect growth to increase to 2.2 percent and eventually surpass the rest of the U.K. in 2017.

According to the University Fraser of Allander Institute, Scotland’s economy will grow to 1.9 percent for 2015, a downgrade from a previous estimate of 2.5 percent. Scotland will continue to fall in 2016, but analysts expect growth to increase to 2.2 percent and eventually surpass the rest of the U.K. in 2017.

The Scottish economy is taking hits from multiple angles. First, low oil prices hit the country hard, especially after such a prolonged period. The energy market also had a cascading effect in the mining and quarrying sectors as well, including the service industries.

The oil industry also impacted the housing sector, with the average value of a Scottish home falling 2.2 percent. Further, many Scottish households are plagued with high debt, which is one of the reasons why critics recommend that Chancellor of Exchequer George Osborne shift his policy on reducing tax credits for low-income families. Under the plan, the government plans to cut tax credits to save 4.5 billion pounds per year, arguing that families will be better off by 2017 due to the Living Wage and income tax changes.

This may seem as though the average family will be better off, but the problem becomes further compounded by the U.K.’s weak economic performance and austerity imposed on the populace.

This is not to say that Scotland has not made any progress. For instance, Scotland announced a 40-percent increase of the living wage to 8.25 pounds an hour. Scotland also surged ahead of fellow British nations by becoming the first government within the British Isles to establish a living wage within the public sector. In addition, Scotland beat other U.K. nations in terms of youth and female employment.

Regardless of the positive news, one cannot ignore an under-performing labor market. Unemployment shot up by 18,000 over the summer, increasing to 170,000. In total, unemployment in Scotland is 6.1 percent, compared to 5.4 percent for the rest of the U.K. Officials plan to boost business morale and increase public sector investment to lower unemployment levels.

Scotland made advances in certain areas, but the manufacturing sector has suffered over years, and more needs to happen in regards to replacing jobs lost from the energy industry. The U.K. as a whole places more focus on the finance and service sectors sustaining the economy, but there has yet to be a cohesive strategy in fostering innovative ways of producing high-quality jobs and reducing government and consumer debt.