Keith Brown: Scotland's economy is stronger
Things are on the up for the Scottish economy, argues the cabinet secretary
Keith Brown - Holyrood magazine
This new year marks a decade since the global financial crash which heralded a period of worldwide recession.
Thankfully, things are on the up for Scotland and the economy remains at the heart of what we do as a government.
We know that a thriving economy equals a thriving population – more and better employment, improved health, a fairer spread of the wealth and a generally happier and more contented populace.
In Scotland, our economy is growing and over the last year, both unemployment has fallen and the number of people in employment has grown to near record levels.
This has happened despite the sharp fall in the oil price in 2015 impacting the oil and gas sector in Scotland and, more recently, the uncertainty caused by a looming Brexit. Therefore, we should acknowledge that Scotland’s economy strengthened in 2017 and both Ernst & Young and Fraser of Allander predict that GDP growth will improve in 2018.
The latest Aberdeen Grampian Chamber of Commerce Oil and Gas survey found that over 50 per cent of firms surveyed in the sector expect their business to grow by 2019, with none expecting further declines – a real show of confidence in and by one of our key industries.
Regional trade statistics showed that the value of goods exports in Scotland’s oil and gas industry was up 43 per cent (£2.6bn) in the third quarter of 2017, and Statoil has reported that a new discovery in the outer Moray Firth area of the North Sea could contain up to 130 million barrels of oil with significant remaining potential.
And spending on business research and development last year in Scotland topped £1bn for the first time ever – we’re supporting further growth in this area in 2018 by increasing grants for business R&D from £22m to £37m per annum.
However, despite the more upbeat outlook we are not complacent and are focused on building on the strong asset base we have in Scotland to support business and grow the economy.
Highlights this year will include seeing construction start on the £65m National Manufacturing Institute for Scotland site in Renfrewshire, the publication of the implementation plan for the Scottish National Investment Bank (with £340m set aside for initial capitalisation), and the establishment of the new £150m Building Scotland Fund to unlock new housebuilding, develop industrial and commercial property and support research and development.
Our Innovation and Investment Hub in Berlin will open and aim to bolster the success of the facilities at London and Dublin, and our Enterprise and Skills Strategic Board, trade envoys network and South of Scotland Economic Partnership interim board are all now in place and ready to hit the ground running during 2018.
Our draft budget, published at the close of last year, includes a growth package which will see spending on the economy increase by 64 per cent – up by £270m in 2018-19.
The draft budget includes £96m of extra support to deliver the most attractive business rates package in the UK with the increase to the rates poundage capped at CPI inflation. There’s also £600m for our ‘Reaching 100%’ broadband programme.
And we continue to support growth with 70 per cent of taxpayers paying less in income tax over this coming year, thereby protecting consumer spending while still raising additional revenues to support vital public services.
We are more than doubling our investment in city region deals and proposing an ambitious programme of infrastructure investment for 2018-19 of more than £4bn, in line with our Programme for Government commitment to invest £20bn over the life of this parliament.
However, our position in Europe remains a huge concern, still casting a considerable shadow over our economy.
The EU is the largest single market for Scotland’s international exports, with exports worth £12.3bn in 2015 – an increase of £520m on 2014, and Brexit threatens to cost our economy around £11bn a year by 2030, and result in 80,000 fewer jobs, compared to remaining a member of the EU.
The Fraser of Allander report on Brexit and the sectors of the Scottish economy reports that 134,000 jobs in Scotland are supported by trade with the EU.
Analysis by the London School of Economics in October demonstrated that the EU referendum result is already having an impact with the fall in sterling and higher inflation costing the average household over £400 a year, with Scotland being one of the hardest hit parts of the UK.
While the proposed first stage agreement between the UK Government and the EU is a welcome step forward in the negotiations, the next phase on trade will be significantly tougher.
It is imperative that the Scottish Government is fully involved in these talks so we can protect Scotland’s interests in Europe.
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