Scottish economic insights: November 2023

Introduction

Following the economic shocks of EU-exit, the pandemic and high inflation, economic growth has remained subdued as inflation has gradually fallen from its most recent peak at the end of 2022, while the labour market has been particularly resilient with low unemployment.

The rise in interest rates is playing an increasing role in slowing economic activity as cost challenges continue to impact on household budgets and business investment decisions. While expectations are for weak growth to continue into 2024, inflationary pressures are expected to continue to ease at a more gradual pace and the underlying weakness in demand is expected to start feeding through to the labour market. Furthermore, weak global growth and the conflict in Israel and Gaza add to the risks and uncertainty in the global economic outlook.

This edition of the Scottish Economic Insights provides an update on current economic risks and provides further analysis on three key themes in current economic conditions: inflationary pressures, the weakness in economic growth, and labour market resilience.