Blog: Scotland needs economic hope
Blog from DHI trustee, David Gow reflecting on our latest Understanding Scotland Economy Tracker.
27th November 2024
by David Gow, DHI Trustee
"Fings can only get worse," warned PM Keir Starmer in a negative take on the 1993 D:Ream anthem that ushered in the last Labour government and the Northern Ireland band has now banned the party from using. It's one message from the Prime Minister the public fully believes in five months after Labour's landslide win.
Our latest Understanding Scotland Economy Tracker, the 13th 'wave' in the series, highlights a deepening pessimism among Scots, young and old, about their own and the country's prospects. Almost two-thirds (63%, up 9% on the August survey) believe the economy has worsened in the past year and 65% (up 13 points) expect a further deterioration. At a personal level, the sense of doom is slightly less dark: at 48%/44%. But don't hold your breath.
It's pretty plain that Scots, like most Brits, know and feel that the UK is measurably poorer now than it was, say, pre-pandemic or pre-Brexit or pre-great financial crisis even over a decade ago. The last parliament (2019-24) saw the worst decline in earnings growth for over 60 years and the "boomers'" children are worse off than their parents. Too many of these are now attracted to the Far Right - across Europe and elsewhere.
Sebastian Burnside, NatWest chief economist, told me at the tracker's launch (25 November) that he didn't expect a new recession but with Donald Trump already slapping prospective tariff hikes on Canada, Mexico and China it must be nip and tuck. A generalised tit-for-tat trade war will almost certainly deepen any recessionary tendencies, notably in the eurozone, with the ghost of Smoot Hawley 2.0 worrying the hell out of policymakers and observers. (Or it should be!)
Skipped meals and depression
Almost a half (47%) of younger Scots, according to our survey, say economic anxieties and pressures are affecting their mental health - a finding true of a third (32%) of Scots as a whole. Three in ten of us are losing sleep over our finances. People are cutting back on buying fresh food products and skipping meals (as many as 19%) and this is more true of young people than other demographic groups.
For me and others the greatest worry is the impact upon young children. Danny Dorling, Professor of Geography at Oxford University and a surprise guest at the launch, commented the worst affected in terms of the rise in child poverty in the Europe is England, he shocked us. No English county outperforms Scotland in this regard. In terms of economic pessimism, suggested this was a global trend - with some notable exceptions in countries such as India... and Russia - for other reasons.
This, of course, is no consolation. Around a quarter of a million of Scottish children (26%) live in relative poverty and the Scottish Government is way off reaching its 10% target by 2030-31, even with the Child Payment. We all need hope but our young people, above all children, need an injection of this most of all if we are to begin to tackle the enduring UK/Scottish problem of low productivity growth which, as Burnside said, is the biggest source of declining living standards.
Investing in the future
Rachel Reeves, the UK chancellor, is struggling to inject hope and optimism into business and consumers for all her talk of investment and growth. Our tracker, equally, sets a high bar for Shona Robison, finance secretary, to cross when she presents the Scottish Budget on December 4. Even the unexpected boost to the Scottish Government's net fiscal position from the first Reeves budget - "transformed" according to the IFS - may not be enough.
Robison, cannot promise the earth but she could and should offer the prospects of a (eventually) more stable outlook and put the emphasis on investment in education and training as well as in the most promising economic sectors, including the (struggling) creative industry. Our tracker points to an urgent need, above all, to restore public confidence in the future.
"Get Scotland Working" is likely to be a theme (h/t the UK version unveiled on November 26) for her to adopt. Not in terms of unemployment but incentives to enter or re-enter the labour market, notably among the more than 300,000 Scots on adult disability payment and those economically inactive as a whole (22.6% of the 16-64 age group) of which there are a staggering 9m in the UK.
However, for many work is not a route out of poverty or cutting the welfare bill, with around four in ten of those on Universal Credit in Scotland, being in work. Low paid and precarious work traps many in a constant battle to make ends meet - this certainly won’t help boost productivity with so many people losing sleep over their finances.
Collectively, Scottish politicians and civil society need to turn around what is one of the most arresting tracker findings: a net 64% of our citizens believe the economy works in the interests of the wealthy while a net -56% think it does not work for them individually.
Blog: Are we singing a new song?
New blog from David Gow, DHI Trustee, are we singing a new song? Can things only get worse?
29th August 2024
by David Gow, DHI Trustee
"Fings can only get worse," Sir Keir Starmer intoned in the 10 Downing Street rose garden on August 27 in a reverse reprise of Labour's 1997 campaign song . "Before they get better." He added that the UK should "accept short-term pain for long-term gain." It's a tough ask but maybe Scots at least are up for it.
Perhaps, indeed. What emerges from our latest quarterly survey of voter sentiment towards the Scottish Economy, Understanding Scotland, is that Scots are increasingly torn between feeling (a shade) more upbeat and anxious, between modest optimism and continuing pessimism.
Certainly, more than half (56%) of the 2227 respondents to the survey conducted exactly a month after the July 4 General Election still think Scotland is heading in the wrong direction but that's six points down on the record 62% in May while those believing the opposite are up four points at 23%.
What's more, fears about the cost of living/inflation at 58% are down close to levels last seen in January 2022 (56%), probably reflecting the upturn in earnings and even (some) lower prices. (The survey pre-dates Ofgem's announcement of a 10% hike in energy guide prices). Most tellingly, those thinking that general economic conditions are worse than 12 months ago have fallen to 52% (net) or the lowest level since the survey began in October 2021. Personal negativity is down to 42% from a high of 65% in November 2022 while optimism is up to 15% (net) - hardly a dizzying decline but worth monitoring to see if it upticks
As we and our colleagues at the Diffley Partnership say in the report's intro, "a growing proportion are unsure about the country’s direction, suggesting a populace still searching for clarity in uncertain times." As we point out, there remains a significant sense of precarity, notably among families with children.
Unhealthy options among the poor
More than one in five (22%) is still cutting back on fruit and veg to cut food bills, a bad signal for a nation fighting rampant obesity, while a similar number is reducing meal/portion sizes to save money - the same goal pursued by the 14% skipping meals. It's surely bad news that more than a half (52%) admits to shopping on price rather than health, while a quarter or more is eating processed food and/or cheap food requiring little or no cooking. And we know from here and elsewhere that it's poorer parents, particularly young mothers, who skimp on meals so they can feed their kids.
Financial resilience remains worryingly high among less well-off households. A third of households with children are not confident they could raise £100 in an emergency without borrowing, a level that rises to 58% when the required loan is £500. Inequality may not be a substantial policy issue (at just 8%) but poverty remains among the biggest priorities (27%).
Tax and spend alerts
Ahead of the October 30 Budget (UK) and the Scottish Government's renewed brake on spending, concern about manging public finances is on the up - at 29% compared with 24% a year ago. And a third remains convinced spending on public services is an important issue facing the Scottish economy. Rachel Reeves' "black hole" is clearly and understandably putting the wind up a lot of folk., including actual and/or potential pensioners (a concern for 12% or up three points on May.)
Will hospital consultation/treatment waiting lists come down? Obviously, it's too soon to tell but healthcare and the NHS remain by far the biggest concern (51%) - compared with the mere 8% thinking of the constitution, an issue that does not win elections. Nor, surprisingly, do green/climate change issues (just 11%, down one point on May).
Unsurprisingly, however, immigration and crime are rising up people's political agenda, with the former at a survey peak of 13% (up three points on May) and the latter at a new high of 11% (up two points). The two are often wrongly linked, notably in tabloid media, but both may well prove growing headaches for the new UK government. We shall closely monitor trends here.
Overall, it's clear from this survey that the new UK government and whichever administration emerges from the elections to Holyrood due in May 2026 have a lot to do to convince a sceptical population that those "sunlit uphills" can be glimpsed around the corner. Again, hardly surprising after this dreich summer...
End
Image credit: sharing thumbnail image by Austin Chan free from Unsplash 29.08.2024
Blog: Shaking off our misery?
Are Scots beginning to feel more optimistic about the economy? David Gow discusses the latest Understanding Scotland Economy tracker results, are we shaking off the misery?
Blog by David Gow, DHI Trustee
If the public mood in Scotland, as measured by the latest quarterly Understanding Scotland Economy Tracker, is pretty much as bad as it seems, we might as well call off the final five weeks of campaigning in the UK general election and put the politicians out of their misery by voting now.
After all, there are critical and more exciting events coming up like the opener in the Euros 24: Germany v Scotland on June 14 in Edinburgh's twin city Munich.
The latest tracker certainly paints a sombre picture of how we Scots feel. Almost two in three (62% compared with 58% three months ago) believe Scotland is moving in the wrong direction - the highest level since the series began. And less than one in five (19% compared with 23% in February) think it's heading the right way. These are devastating findings for our political class as a whole (which should read the findings and wake up to reality).
The reality is that Scots are worried above all by Healthcare/the NHS - 52% view this as the top issue - and the cost of living (40%) though this latter concern is easing though hardly to the point where "turned the corner" talk is credible. And almost one in five (18%) list trust in politics as the critical issue - a number that's rising.
This does not amount to a conducive environment for a bog-standard campaign centred around "tax and spend" policies (like the one we're having now). Scottish voters are more than disgruntled. Their mood may not (or perhaps even may) amount to despair or rage but they certainly need a dose of hope and optimism. And please don't talk about the constitution - only 7% think it the priority issue.
The overall findings gave plenty of food for thought - and lively discussion - at the latest tracker's presentation in the historic home of RBS on St Andrew Square. It was a lovely late spring morning with sun shining through the upstairs windows and birds carolling us but the discussants were reflective, pondering the state we're in - not the one the politicians are peddling elsewhere.
Introduced by Scott Edgar of the Diffley Partnership, the tracker's results were analysed by Sebastian Burnside, NatWest Chief Economist, and João Sousa, Deputy Director at the Fraser of Allander Institute, with a strong emphasis on cost of living issues, labour market developments and fiscal outcomes and outlooks.
This attendee was struck by several things, notably João's point that the rise in average earnings in Scotland, albeit outpacing inflation now, still remains below the increase in prices - i.e., people do not feel and indeed are not better off than last they were when they went to the polls in 2019. Indeed, this is the first time this has happened. The tracker shows Scottish sentiment in line with this: "...economic pessimism may prove hard to shake despite incremental improvements."
Women, especially those with children, are among the most pessimistic. Even if some of the pessimism has lifted overall only 11% think things generally will improve (be much better or somewhat better) in 12 months' time and, when it comes to personal wellbeing, this rises to just 17%. Still, fewer folk are cutting down on leisure activities to make ends meet or losing sleep over their finances albeit the decline is quite marginal - and three in five Scots are still cutting back on non-essential purchases.
Sebastian intrigued the audience with the bank's internal evidence that its customers are dipping into their savings/deposit accounts when they're forced to make bigger outlays such as repairing the car. Overall, it seems, the struggle to remain on top of the monthly budget is as tough as it can get, notably for lots of younger folk. More than half of Scots (53%) remain dissatisfied with income covering the cost of living.
Campaign mantras such as "change" or "stability" in this context seem beside the point, especially when the fear lurks that the next government will be forced, willy nilly, to raise taxes in order to deal with a worsening UK fiscal position as the IMF and others have warned. It's a frequent message from a weary public when the TV crews conduct 'voxpops' in the pub or coffee shop.
Will the next tracker findings - due in late August or several weeks after the July 4 general election - reveal an uptick in optimism?
Don't hold your breath! It's more than likely that, whatever the outcome, voters will be suspending judgement (as many may do by abstaining and driving turnout down to historic lows) . What they most want is services delivery, not warm promises things can only get better. Are the candidates paying attention on the stump?
Watch the event recording:
Understanding Scotland Economy Tracker - May 2024 Insights
Image credit: sharing thumbnail image by Tadeusz Lakota free from Unsplash 03.06.2024
Blog: People’s priorities laid out for politicians
Catriona Matheson reflects on the latest Understanding Scotland Economy Tracker and what it tells us ahead of the General Election.
Blog by Catriona Matheson, DHI Trustee
As any parent of young children will be able to tell you, a lack of sleep can be hugely detrimental to your wellbeing.
With two very young children at home, I wasn't surprised to learn that more than one in three Scots surveyed about their finances said their mental health had taken a nosedive when their money worries were keeping them awake at night.
The latest Understanding Scotland Economy Tracker recently surveyed Scots about their financial wellbeing. The reading was bleak, though unsurprising in the current economic climate. More than half (54%) of Scots reported that their financial wellbeing is worse than 12 months ago, and this was higher among women (57%) than men (50%). In addition to losing sleep and poor mental health, significant numbers reported a negative impact on home relationships (22%), a detrimental impact on physical health (16%) or feeling less effective at work (13%).
Only one in three (34%) of respondents expressed contentment with their income levels and their ability to cover the cost of living, down from 37% previously. This decline is particularly pronounced in the ability of Scots to meet household bills, reflecting the difficulties faced by families and individuals across the country as they continue to navigate increased costs against stagnant incomes.
Interestingly, despite these figures the cost of living was prioristed second (40%) to healthcare (52%) as top issues facing Scotland. This means Scotland's political parties should focus on the NHS as much as economic recovery when speaking to the electorate over the course of the General Election campaign.
While the survey presented nuanced attitudes, a prevailing sentiment was clear: there is unease with Scotland's trajectory. A striking 62% of Scots think things in Scotland are going in the wrong direction which marks a notable surge from 58% in February 2023, and is the highest ever recorded in the Understanding Scotland series. Conversely, the proportion believing that Scotland is headed in the right direction has dwindled to 19%, the lowest the David Hume Institute has ever recorded. This unhappiness among Scots regarding the direction of the nation presents a steep challenge for political leaders. Not only does Scotland's economic prospects need to improve but Scots will need to feel the benefit before they have confidence in the country's leadership.
Survey fieldwork took place in early May when First Minister Humza Yousaf announced his resignation, and there was still uncertainty over his successor. At a UK level, an election was on the horizon but the timings were unconfirmed.
A few short weeks later, we now have John Swinney in Bute House and an imminent General Election with Labour poised to enter Number 10. The new First Minister has put economic growth at the heart of his plans for the Scottish Government, and Keir Starmer has already hit the campaign trail talking of "rebuilding Britain."
Whether our new First Minister and the next Prime Minister can turn the ship around remains to be seen, and whether Scots will start to see any benefit in their bank balance is even more uncertain. In the meantime, political leaders would do well to focus on the NHS and the cost of living crisis as they pound the pavements over the next few weeks. And let's hope, for the sake of getting a good night's sleep, the economy significantly picks up before too long.
Further reading:
Press Release: Two-Thirds of Scots continue to reduce spending
Latest in the quarterly Understanding Scotland Economy tracker series continues to shed light on Scots’ survival tactics during challenging economic times
Latest in the Understanding Scotland series continues to shed light on Scots’ survival tactics during challenging economic times
The Understanding Scotland Economy Tracker survey tracks economic attitudes and spending intentions from more than 2,000 members of the Scottish adult population every 3 months. The fast turnaround time, this data was collected only two weeks ago, means early identification of changes in trends to support decision-makers.
The latest insights show two in three Scots (67%) have resorted to reducing non-essential purchases, while significant proportions continue measures such as cutting back on energy use (64%) and leisure activities (62%). Additionally 45% report decreased savings contributions, and over a third are tapping into them for everyday expenses. These coping mechanisms are particularly prevalent among younger age groups, underscoring the disproportionate impact of the high cost of living on working-age individuals.
The study reveals a cautious outlook among Scots regarding future spending. Both essential and non-essential spending expectations show little change, indicating ongoing caution amidst economic uncertainty.
Furthermore, the latest findings highlight generational divides in priorities. Healthcare and the NHS are paramount among older age groups, whilst younger individuals are more focused on addressing rising living costs.
The study also reveals growing doubts among Scots about Scotland's trajectory, with the majority (58%) believing that the country is heading in the wrong direction. This marks a three-percentage-point increase from the previous wave and reflects an increasing sense of pessimism about the future.
Mark Diffley, Founder and Director of Diffley Partnership, said:
“The latest findings from our regular Understanding Scotland series continue to shed light on the economic landscape in Scotland today. The fact that seven in 10 Scots think that economic conditions are worse than 12 months ago and six in 10 think conditions will be worse in 12 months’ time, reveal ongoing and widespread pessimism. The data also again reveals the challenges posed by rising living costs and offers a glimpse into the daily struggles of many Scots, particularly those from disadvantaged backgrounds, highlighting that the cost-of-living crisis is far from over in terms of real life experiences.”
Susan Murray, Director of the David Hume Institute said:
“These findings reveal a stark snapshot of the economic reality of living in Scotland today. For anyone wanting to improve productivity or economic growth, focus on the number of Scots continuing to lose sleep over their finances, which creeps up another one percent this quarter to 30% and rises to 43% of 35 to 45 year olds. With so many of your workforce affected, we can only hope that things don’t get worse before they start to improve.”
The full report can be found here.
Notes to editors
Designed by the Diffley Partnership, the survey received 2,305 responses from a representative sample of the adult population, aged 16+, across Scotland. Invitations were issued online using the ScotPulse panel, and fieldwork was conducted between the 1st-5th February. Results are weighted to the Scottish population (2020 estimates) by age and gender.