Scottish Budget: High taxes may put the economic opportunities offered by net zero and artificial intelligence at risk – Graeme Jones

Alba Partners opened its global headquarters in Edinburgh partly because of optimism about Scotland’s economic future

The coming Scottish Government Budget will be one of the most significant since the dawn of devolution. Finance Secretary Shona Robison faces difficult choices amid a £1 billion revenue budget shortfall, strained wider economic circumstances, and the prospect of significant structural change following the advent of net zero and artificial intelligence.

​Amid all the doom and gloom, however, there is cause for optimism in the Scottish economy, which is one of the main reasons Alba Partners recently decided to open its global headquarters in Edinburgh, having built the management consultancy business over the previous three years in London and the Middle East.

​In particular, Scotland has notable, genuinely world-leading sectors. Given the time of year, Scotland’s food-and-drink sector is perhaps most prominent in people’s minds. But, as a former chief executive of Scottish Financial Enterprise, I understand first-hand the tremendous strengths of our financial services sector. Scotland also has a well-established energy and vibrant renewables sector as well.

Humza Yousaf and Finance Secretary Shona Robison should give Scottish businesses a leg up (Picture: Jeff J Mitchell/Getty Images)

​These industries do not just contribute significantly to the Scottish and UK economy, but also leave Scotland well-placed to seize the opportunities afforded by the journey to net zero. All eyes have understandably recently focused on COP28, and the measures agreed by world leaders there, but there is a growing urgency to deliver these ambitions in reality on the ground.

​With a natural ecosystem in capital finance, asset management, and a plethora of powerful and prudent investors, Scotland is primely positioned to spearhead the funding of the green transition. With a world-leading energy sector, it also has the expertise on its doorstep to deliver that transition too. This combination leaves Scotland uniquely placed as the world seeks to deliver net zero at scale and pace.

​Another factor that attracted Alba Partners to headquarter in Scotland is its vibrant skills sector. Scotland hosts some of the finest universities in the world, with a global reputation for innovation, research, and skills. This leaves Scottish businesses and the wider economy in a strong position to not just meet the challenges posed by artificial intelligence, but to seize the opportunities afforded by it too.

​Therefore, as we sit on the cusp of two era-defining economic revolutions – net zero and artificial intelligence – there are many reasons to feel optimistic about the Scottish economy. But we cannot be complacent either.

​Scotland’s economic growth and productivity have lagged behind our nearest neighbours and competitors in recent years, and that has to change. Economic growth is vital not just for businesses, but also to support public services, which face their own challenges with staffing, funding, and operations.

​There are many levers that the Scottish Government can pull to try and kick start growth and productivity, and it is vital that Finance Secretary Shona Robison does so. Examples of these might include extending business rates relief and reforming land and buildings transaction tax.

Certainly, whatever the Finance Secretary chooses to do, she must ensure the Scottish Government’s overall taxation plans – including personal taxation – do not leave Scotland at a competitive disadvantage. To do so would risk negating the natural advantages of Scotland’s economy, and giving Scottish business a handicap where it should be getting a leg up.

Alba Partners chose to headquarter in Scotland because it believes in the underlying strengths of the Scottish economy and, particularly, that Scotland is well placed to meet the twin challenges of our age, climate change and artificial intelligence. We hope the Deputy First Minister will use the Budget to build on those strengths and help propel the Scottish economy into a new era of growth.

Graeme Jones is chair of Alba Partners and a former chief executive of Scottish Financial Enterprise