New figures from EY suggest the Aberdeen labour market will contract slightly every year between now and 2024, while employment in Inverness will grow by 0.3% annually.
But the 0.1% average annual drop in the Granite City wil coincide with local economic growth of 0.9% a year in gross value added terms, while the Higland Capital is expected to average 1.2% GVA growth annually, the professional services firm says in its EY Scottish Item Club 2020 Forecast.
The document also suggests the Scottish and UK economic growth gap is narrowing, from 0.5% GVA in 2019 to a predicted 0.2% lag north of the border in 2022.
Scotland’s economy is predicted to grow by 0.8% GVA in 2020 before picking up to 1.4% in 2021.
EY also says Scotland’s population is likely to peak in 2021, with working-age immigration having fallen by 70% between 2018 and 2020 in the run up to Brexit.
The report says the private services sector will continue to drive economic progress across Scotland, contributing more than two-thirds of GVA growth this year.
Professional, scientific and technical activities is the sub-sector expected to drive most growth in 2020, at 2.7% GVA.
Consumer spending in Scotland is expected to grow by just 0.4% in real terms this year.
While this will be aided by 0.8% in real terms growth in personal disposable incomes, spending is likely to stall as caution increases towards the end of the Brexit transition period, EY says.
Speaking on the eve of the report’s publication today. EY UK chief economist Mark Gregory said: “This will be a pivotal year for the Scottish and UK economies following the decisive outcome of the general election in December.
“Global economic growth is slowing, further complicated by Coronavirus, and trade negotiations are ongoing, but uncertainty is beginning to show signs of easing and there has been an uptick of sentiment. It is unclear whether this will transform into sustainable growth activity across Scotland and the UK.”
EY says total employment in Aberdeen increased by 0.2% in 2019, equivalent to 300 jobs.
The local economy grew by 0.7%, slightly trailing Scotland (0.9%) and also behind the UK (1.2%), the report says.
According to EY, the unemployment rate in Aberdeen fell to 3.8% in the 12 months to September 2019 – a decline of 3.1 percentage points from the equivalent period in 2018.
A more up-to date but narrower claimant count measure shows a 0.8 percentage point rise in the year to December 2019, the report adds.
Employment in Aberdeen will contract by 0.2% this year and “remain fairly steady” over the period to 2024 as the local economy grows by 0.9% per year, slower than both the Scottish (1.3%) and UK (1.6%) averages, the report says.
Derek Leith, managing partner of EY’s Granite City office, said: “Aberdeen’s economic growth is forecast to be slightly lower than the rest of Scotland as the city continues to rebase its economy following the downturn in the oil industry.
“It is encouraging to see employment growth across a wide range of sectors. This is a positive indication of the ongoing, and necessary, diversification of the local economy, which continues to grow.”
The report says total employment in Inverness rose by 1.1% in 2019, equivalent to 500 jobs as the local economy grew by 0.9%.
According to EY, the unemployment rate in Inverness fell to 2.1% in the 12 months to September 2019 – a decline of 1.8 percentage points from the equivalent period in 2018.
The more up to date, though narrower, claimant count measure showed a 0.1 percentage point rise in the year to December 2019.
EY forecasts that employment in Inverness will grow by 0.4% this year and by 0.3% annually, on average, between 2020 and 2024, with employment rising at an average rate of 0.3% per year amid local economic growth of 1.2% per year.
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