Dundee and Perth are in for long-term jobs pain as the brakes slam hard on the Scottish economy.
The EY Scottish ITEM Club has radically revised down its output growth forecast by 1.2% to just 0.7% for 2016 in light of Brexit and the US elections.
The group has also cut its Scottish GDP estimate for 2017 to 0.4%, half the rate it anticipates across the UK.
Senior economic adviser Dougie Adams said: “During the last 12 months Scottish growth has been challenged by various economic factors.
“The unsustainable growth from the construction sector has waned as expected and the impact of low oil prices continues to reverberate through the economy.”
The forecasting group said it expected medium-term pain for the labour market in both Perth and Dundee, although there was no mention in the analysis of the impact a successful Tay Cities Deal bid – a targeted and potentially transformatory government-backed investment worth hundreds of millions of pounds – could have on the area.
The Item Club research suggests employment in Dundee will fall by 0.3% in 2016, and adds the city is likely to see a net 1,500 job losses through to 2019.
It also points to annual gross value added (GVA) growth of 0.6% for Dundee in the medium term, and says information and communications will be the city’s fastest growing economic sectors thanks to the established digital base.
The study found Perth and Kinross is currently faring better, with an uplift in new scientific, professional services and technical roles helping the area to outperform the Scottish average with an expected 1.2% rise in employment this year.
However, the three-year outlook remains negative with EY forecasting a 0.3% decline in the labour market for each year through to 2019.
It said the public sector was likely to shed jobs in the period, along with a shrinking of the region’s manufacturing and financial services base.
“None of the UK’s nations, regions or cities will be immune to slower economic growth over the next three years but there will be significant variations across the country indicating there is more work to be done in rebalancing the economy,” Mark Harvey, EY Senior Partner for Scotland, said:
“In a slower growing economy it will be harder to achieve more economic balance, not only on a UK level but across Scotland too.
“Although we can see pockets of growth in Scottish cities, little progress is likely to be made to increase these further and expand the output of the weaker cities in the short-term.
“UK and Scottish policy must be designed to complement local policy through targeted initiatives to support trade, deliver infrastructure, invest in skills and support growth in key sectors.”