What does the Scottish Budget tell us about the economy?
The Scottish Government’s draft Budget changed two major taxes and revealed differences in economic performance.
3 min read
Derek Mackay’s draft Budget widens some of those differences. Top of the list is the difference in higher rate income tax threshold which will remain at £43,430 in Scotland rather than rising to £50,000 south of the border. And then there’s the wedge in the property taxes as the additional home rate on LBTT rises from 3% to 4%.
But there are differences on the economic side too.
Average GDP growth for the next 5 years is forecast to be 1.1% for Scotland, compared to 1.5% for the UK as a whole. Most of the difference is down to population growth, or the lack of it. Scotland’s 16-64 year old population probably peaked in 2018. We will get some more workers from raising the pension age, but it won’t provide the boost to the economy that we’ve grown accustomed to. The age of ageing is upon us.
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LBTT additional home rate to rise from 3% to 4%
Higher rate tax threshold frozen for Scottish Income Tax
Scotland’s working age population peaked in 2018
Productivity growth even more vital as ageing of economy now takes effect
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