Difficult decisions ahead for Scottish economy

Written by Michelle Rodger

Difficult decisions are necessary to deliver sustainable long-term economic growth, according to a new report from the Fraser of Allander Institute.

Scotland’s businesses, industry organisations and policymakers need to make “practical and tough decisions” if they want to continue to fund public services at the current level under the new Block Grant Adjustment agreed between Westminster and Holyrood, warns the report.

Professor Graeme Roy, director of the Fraser of Allander Institute at the University of Strathclyde, said: “This report sets out some of the key global trends that will shape Scotland’s economic future. In doing so, we’ve also highlighted where there are opportunities for Scotland to grow and prosper.

“Whilst Brexit uncertainty continues to dominate current thinking, it is vitally important that Scotland’s business leaders, industry bodies and politicians do not lose sight of the wider opportunities, challenges and global changes that Scotland faces in the years ahead.”

The report – Scotland in 2050: Realising Our Global Potential – aims to start a conversation with Scottish businesses and organisations active in all sectors of the economy to mitigate the challenges and seize the opportunities ahead in a rapidly-evolving global economy.

These insights will feed into a final report that will be published early next year to help inform the policy decisions made by the Scottish and UK governments.

Long-range macroeconomic modelling has been used to produce new data and insights to set the scene for a wide-ranging conversation. Its key findings include:

  • Scottish exports and Scotland’s tourism sector support around 952,600 jobs.
  • For every 100 jobs directly supported by exports, an additional 66 jobs are supported indirectly.
  • Just five sectors account for more than half of all Scottish international exports and just 70 companies account for more than half of Scotland’s exports.
  • Fast growing new and emerging markets (in particular China, India, Indonesia, Brazil and Russia) present significant opportunities for Scotland’s exporters in the years ahead.
  • By 2050, the world population is predicted to grow by 28 per cent, with much of this growth expected to be in emerging economies.
  • However, Scotland realised average GDP growth per head of just 0.2 per cent between 2008 and 2017, compared with annual growth of 2 per cent between 1998 and 2007.
  • Scottish productivity is currently 20 per cent lower than the top-performing countries in the OECD. The Netherlands can produce in four days what it takes Scotland five days to produce.
  • New and growing markets, investment in technology and innovation (including renewables) all provide significant opportunities for Scotland in the years ahead.
  • Following the transfer of new fiscal powers to Scotland, growing the economy is more important than ever, with around half of Scotland’s budget determined by the relative performance of Scottish tax revenues.
  • An annual 0.2 per cent gap between Scottish and rUK devolved tax revenues per person would amount to a 4 per cent budget gap over 20 years.
  • Scotland’s working age population is forecast to fall over the next decade, while the comparable age group within the UK as a whole is expected to rise.



About the author

Michelle Rodger

Michelle is a former national newspaper journalist who co-founded an award-winning IT business before launching Tartan Cat Communications. A social media and crowdfunding expert she manages media and communications for Business for Scotland.

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