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Last Updated: Wednesday, 23 November 2005, 13:19 GMT
Scottish economy 'outpacing UK'
Shoppers in Perth during warmer times
The report says Scottish shoppers have been more resilient
The Scottish economy is set to grow faster than the UK average this year, thanks largely to more resilient consumer spending, a report has said.

Scotland's gross domestic product (GDP) will rise by 1.7% in 2005, compared with 1.6% in the UK as a whole, the Scottish Item Club research group said.

However, the report said Scotland's economy will grow at a slower rate than the UK average next year.

Scotland's 2006 growth figure is expected to be 1.9% and the UK's 2.2%.

Manufacturing rebound

While consumer spending has fallen sharply across the UK this year, as people tighten their purse strings and aim to reduce their debts, Dougie Adams, economic adviser to the Ernst & Young Scottish Item Club, said consumer sentiment had remained more positive north of the border.

Looking ahead to 2006, he said the Scottish economy should benefit from an absence of "one-off" knocks that have hit it in recent years.

These have included the downturn in electronics from the end of 2000, the setback to financial services growth in 2002 and 2003, and the relative weakness of business services sector in 2004.

"Scotland in 2006 reflects the re-balancing that is underway in the UK economy - away from consumption towards investment and exports," Mr Adams said.

Scottish manufacturing will return to growth in 2006, the report said, with output up by 1.4%, rising to 3% growth in the electronics sector.

However, it predicted that manufacturing jobs will still decline.

Looking further ahead, the Ernst & Young Scottish Item Club expects Scottish GDP to grow by 2.3% in 2007, compared with 2.8% for the UK.

The Ernst & Young Item Club uses the Treasury's own economic model for its forecasting.

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