Subdued outlook for Scottish economy

The taxes now devolved to Scotland will raise almost £16 billion in the next financial year (2018-19), says the Scottish Fiscal Commission in its first set of independent and official forecasts.

Commenting on the forecasts, Commission chair Lady Susan Rice, said:

“Our forecasts point to a subdued outlook for economic growth in Scotland, driven by slow productivity growth and exacerbated by demographic challenges. 

“This outlook in turn impacts on tax revenues, particularly our forecasts of income tax.

“Since we were established as a statutory body in April, we’ve been working hard to develop our models and approaches, ensuring we’re using the best and most suitable data and models appropriate to Scottish circumstances.

“Our forecasts play an important part in determining the Scottish Budget. The OBR’s forecasts for equivalent UK Government tax receipts are also used to work out the total amount of money the Scottish Government has to spend.”

The Commission’s Report forecasts that the Scottish economy will grow at less than 1% per year until 2022.

Its five year forecast shows GDP growth to be 0.7% in both 2017 and 2018, rising to 1.1% in 2022, driven by an outlook of low productivity in Scotland over the next five years.

The economic outlook also impacts on the forecasts of income tax revenue, with the forecast for 2018-19 being revised down from £12.3 billion to £12.1 billion.

Included in that figure is the Scottish Government’s new five band Income Tax system which will raise an additional £164 million in 2018-19, rising to £199 million by 2022-23.

The Scottish Government’s new relief for first time buyers is expected to reduce Land and Buildings Transaction Tax revenue by £6 million in 2018-19.

A number of policies on Non-Domestic Rates have also been announced at the Scottish Draft Budget and the Commission estimates that these will reduce tax revenues in 2018-19 by £96 million in total.



Notes for Editors

  1. The Commission’s Report “Scotland’s Economic and Fiscal Forecasts December 2017” is available now, along with a one page graphic and a summary. Background information is also available on this page including spread sheets with data for all the report’s graphics.
  1. Office for Budget Responsibility (OBR) forecasts for the UK as a whole were published in their Economic and Fiscal Outlook on 22 November 2017. These showed growth forecasts for the UK of 1.5% for 2017, 1.4% for 2018, rising to 1.6% by 2022.


  1. The Scottish Fiscal Commission (2016) Act established the Commission as a statutory body, independent of the Scottish Government, to produce official fiscal and economic forecasts for the Government to use in its budget and financial planning. The Commission’s forecasts will also assist the Parliament’s scrutiny of the Draft Budget and Budget Bill.
  1. The Commission’s forecasting remit is specified by the Act and in secondary legislation. The fiscal forecasts are for Scottish Government receipts from fully and partially devolved taxes and devolved social security expenditure. A full list is given in our FAQs at The Commission is also required to forecast onshore Scottish GDP.
  1. The Commission is chaired by Lady Susan Rice and there are two other Commissioners, Professor Alasdair Smith and David Wilson.

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