PwC revises up Scottish economic growth forecast

PwC revised up its forecast for growth in Scotland this year from 2.4% to about 2.8%

New analysis by consultancy firm PwC has added further weight to evidence that the Scottish economic recovery is gathering momentum.

Its latest report on the UK's economic outlook has forecast Scottish economic growth will pick up from 1.6% in 2013 to about 2.8% this year.

The figure for 2014 was revised up from the 2.4% projected by PwC in March.

The revised figure is slightly higher than that forecast in June by the Fraser of Allander Institute.

In its latest report, PwC said its expectations for Scotland were "in line with" predicted growth of about 3% this year for the UK economy.

London is expected to continue to lead the recovery, with growth of 3.4% in 2014, but PwC said all parts of the UK should see growth of more than 2% this year.

House prices

The report also forecast that average Scottish house prices could rise by 5% this year from a base of £181,000 in 2013, and reach £198,000 by the end of 2015.

However, PwC warned that the pace of growth was "unlikely to continue in the long term".

Between 2016 to 2020, Scotland is forecast to experience the slowest house price growth of all UK areas, with the exception of London.

PwC expects the average rise per year in Scotland to be 2.8%, compared with 2.7% in London.

The East Midlands and Northern Ireland are expected to see the fastest growth.

PwC said the pace of growth in house prices was "unlikely to continue" in the long term

'Welcome signs'

Paul Brewer, from PwC in Scotland, said: "These latest figures, alongside those from Fraser of Allander earlier this summer, are welcome signs that the Scottish economy is gathering real momentum.

"From a business perspective, while we are seeing anecdotal evidence of increasing confidence across many business sectors, this isn't necessarily feeding into the volume of investment that is needed to help balance the recovery.

"Unlike at the height of the recession, access to finance is not the key issue, with factors such as the time for investment decisions to be fulfilled and pre-referendum uncertainty more likely causes.

"We need to see a significant step-up in investment if we are to really harness this economic momentum."

'Strong recovery'

Last month, the Fraser of Allander Institute said the Scottish economy was enjoying a strong recovery, with employment and productivity up and strong growth forecast in production and manufacturing.

It revised its forecast for Scottish GDP growth in 2014 to 2.5%, up from its March forecast of 2.3%.

It said the rise in its 2014 forecast was a result of the generally better than expected improvement in performance, optimism in business surveys and an improved outlook, especially for investment.

Also in June, another leading economic forecaster, The EY Scottish Item Club, said Scotland was set to enjoy its best year for economic growth since the financial crisis ,with a rise in employment and house prices.

It raised its growth forecast for the Scottish economy to 2.4% this year - 0.7% higher than its previous prediction in December.