SCOTLAND could enjoy a £77 billion trade boost if it reduces its over-reliance on the rest of the UK for exports and introduce new tax breaks, a report today claims.
Business organisation N-56 is calling on closer ties between the Scottish Government and the world of commerce to develop and deliver an “export-based economic growth strategy”.
Its latest report, which forms part of a series entitled Scotland Means Business, calls for a number of recommendations, including the delivery of a “strong Scottish national brand” to boost exports, continued membership of the European Union and the lodging of an application for the country to join the Nordic Council.
The group – a think tank of economists brought together by the Scottish businessman Dan Macdonald – has suggested introducing targeted tax breaks in areas where Scotland has “existing strengths potential” such as energy and food and drink. It believes that Scotland should adopt an economic strategy “distinctive from that of the UK with its high reliance on the financial services sector in the City of London”.
Key to the report’s argument is that Scotland resists benchmarking itself against the UK, where it claims trade is in decline, following instead the example set by “small, wealthy economies” such as Denmark, Ireland, New Zealand in delivering an export-based growth strategy with a greater focus on entering overseas markets.
Macdonald said: “The Scottish economy is missing out on trade worth billions of pounds when compared with other small wealthy economies and our latest report outlines a series of measures that will allow us to close this gap.
“Increasing foreign trade increases economic growth. We need to change our thinking and our culture, embrace the best examples of what we see elsewhere in the word and bring a global business mentality forward from which all of society can benefit.”
Graeme Blackett of economic consultancy Biggar Economics, which compiled the report, added: “Our research shows that successful small economies tend to be those that have high levels of trade. This is because businesses that export tend to have high levels of productivity.
“A renewed focus on increasing exports should therefore be a prominent feature of the Scottish Government economic strategy, which is currently being reviewed.
“The lesson from prominent trading economies shows that initiatives such as the development of a realistic and authentic national brand can play an important role.”
The report notes that while trade accounts for a larger proportion of the Scottish economy than is the case for the UK as a whole, the country is under-performing when compared to small wealthy economies – 18 countries with populations below ten million. It calculates that trade to the value of £77bn is being missed out on.
Scotland’s trade volumes would need to increase by more than a third to match the average for small advanced economies – or by 63 per cent if oil and gas exports were stripped out.
The report adds: “A realistic and authentic national brand should be developed for Scotland, building on existing initiatives and learning from best practice elsewhere, including the likes of New Zealand and Singapore.”
SUBSCRIBE TO THE SCOTSMAN’S BUSINESS BRIEFING