The Scottish economy : 1990-96

The present forecast covers the initial recovery phase from the early 1990s recession and was conducted using the FAI's Medium Term Model (MTM) of the Scottish economy and was prepared in July 1992. Following this short introduction, the remainder of the paper is in 4 further parts. Section (b) sets out our projections of Scottish final demand. These are purposefully sanguine in order to illustrate the most favourable outcomes likely for Scottish output and employment. These projections are relatively invariant to the recent upheavals in the foreign exchange markets and monetary policy excepting that the new macro profile makes the attainment of this performance more likely. Section (c) sets out our estimates of Scottish output, employment and unemployment for the 1990-96 period. Section (d) discusses how Black Wednesday and subsequent developments are likely to affect the forecast. Our argument is that this forecast is essentially a projection of maximum Scottish growth potential. Devaluation without supply side policy is no panacea. Section (d) sets out our concluding remarks whilst detailed sectoral projections are appended