'˜Tough action' needed to grow sluggish Scottish economy

Scotland's productivity is 20 per cent lower than other OECD nations. Picture: Peter Macdiarmid/Getty Images

The Fraser of Allander report, which was commissioned by law firm Shepherd & Wedderburn, says businesses and policy makers must take “tough and practical” decisions to build the economy.

The report – Scotland in 2050: Realising Our Global Potential – says difficult decisions are necessary to deliver long-term economic growth and to continue to fund public services at the current level under the new Block Grant Adjustment agreed between Westminster and Holyrood.

The report, which has been produced to mark Shepherd & Wedderburn’s 250th anniversary, aims to start a conversation with Scottish businesses to mitigate the challenges facing the economy.

The report found just 70 companies account for more than half of Scotland’s exports.

Scottish productivity is currently 20 per cent lower than the top-performing countries in the OECD, adding that the Netherlands can produce in four days what it takes Scotland five days to produce.

An annual 0.2 per cent gap between Scottish and the rest of the UK 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.

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.

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.”

Paul Hally, chairman of Shepherd & Wedderburn, said: “We commissioned the Fraser of Allander Institute to conduct this landmark research project to inform a conversation that will help us identify the sectoral strengths, strategies and policies that will best serve our nation in the years ahead. We look forward to businesses and industry organisations bringing their unique perspectives to this important conversation and helping shape our economic future.”