SCOTLAND has been ranked amongst the most productive nations and regions in the UK in a new report.
Accountancy group PwC produced a UK economic outlook analysis looking at several different areas across the UK.
The report states however that Scotland is still below the national average when it comes to productivity, but came in third behind London and the south-east of England.
According to PwC, growth in Scotland will sit around 0.5 percentage points behind the UK average before heading into a year of slow and potentially negative growth.
How severe this will be dependent on energy prices; how high inflation soars and the amount of government support which will be made available to households and businesses.
Scotland came third in productivity rankings in the report at £39 per hour of work, but this was two percentage points behind the UK average.
It comes as the accountancy firm warned that workers across the UK are facing an average £2000 cut in real terms from wages by the end of the year as inflation hits double-digits.
Jason Morris, the regional market leader for PwC in Scotland, said businesses and consumers face a very difficult situation as inflation heads towards a five-decade high.
Morris added that this could lead to the largest fall in real wages since records began.
He said: “With average income levels sitting below the national average, and due to the fact that lower-income households tend to see a higher budget share on fuel and food, there’s a real risk that households in Scotland could feel the impact more keenly.”
The PwC set out a number of scenarios for the months ahead including a “mild winter”.
In the event that we see recovery in Russian gas exports, gas prices dropping back to the levels seen at the start of September, and “considerable” government support in response to the cost of living crisis, then it could see Scotland report growth of 3.1% for the whole of 2022.
However, if Russian exports and gas prices stay at their current elevated level, mitigating the impact of any government support, then under the “harsh winter” scenario, growth will only hit 2.6%.
Bringing in a freeze on household energy bills could keep inflation between a peak level of 10% and 13%, the accountancy group said.
Without a freeze, inflation is forecast to top 17% in the first half of next year, they added.
Morris added: "Until [the gas] market regains stability, predictions on the inflation outlook will remain difficult.
"It presents a challenging environment for businesses to plan, mitigate and adapt."
