Fraser of Allander Institute Blog

Scottish productivity statistics – latest update and longer-term trends

Last week, the Scottish Government published updated labour productivity figures up to the third quarter of 2018.

The release was also effectively the first official assessment of Scotland’s international productivity performance up to the end of 2017.

Recall that this was the measure used to assess the ‘Scotland Performs’ target of being in the top quartile of OECD countries for productivity. Recall too that, back in 2007, the Scottish Government’s Economic Strategy set a target to reach this top quartile by 2017.

Last week’s data confirms that this target has been missed. Scotland’s productivity remains around 20% below target.

Scottish Exports: Growth in 2017 but target missed

Today the Scottish Government published Export Statistics Scotland, the key source of information on Scottish exports.

In light of the ongoing Brexit uncertainty and the potential risks to Scottish trade patterns, today’s publication offers some interesting insights into the different markets that Scotland sells to, the sectors that are doing well (and those less so) and Scotland’s export performance over the longer-term.

Headline numbers

International exports from Scotland rose by £1.9 billion – or 6.2% – between 2016 and 2017. Note that this is in nominal terms; in real terms the growth was just 0.5%.

Boosted by the competitive value of the pound and strong growth on the continent in 2017 – where the Euro Area economy grew at its fastest rate since 2007 – the improvement in Scottish exports was driven by a £1.7bn increase in exports to the EU. This was equivalent to a 13.3% rise between 2016 and 2017.

Scotland’s exports to the rest of the UK also increased in 2017, up £2.2 billion (4.6%).

The Scottish Government’s Economic Strategy had a target to grow Scottish international exports by 50% by 2017 (on a 2010 baseline). Despite today’s uplift, the figures confirm that this target has been missed, with international exports up by around 35% since 2010.Continue reading

The gains from economic integration: The EU has still a long way to go

David Comerford, Chancellor’s Fellow, Fraser of Allander Institute, Department of Economics, University of Strathclyde

Sevi Rodriguez Mora, Professor of Economics, University of Edinburgh; CEPR Research Fellow

First published on VoxEU.org at: https://voxeu.org/article/gains-economic-integration-eu

Summary

Populists in Europe are contesting the perceived benefits of economic integration between countries. This column uses data on trade frictions to estimate the long-run impact of trade frictions on GDP if countries in Europe were to be more or less integrated. Negative between-country impacts, such as from Brexit or an EU collapse, imply a GDP reduction of between 1-3%. The potential trade benefits of a ‘United States of Europe’, on the other hand, may be an order of magnitude greater for its members.

Research & Development in Scotland

Recently, the Scottish Government published their latest Business Enterprise Research and Development (BERD) results. This includes data on R&D activity of businesses operating in Scotland in 2017.

This led to the Scottish Government concluding that “Scottish businesses are investing record amounts in research and development” – with expenditure in Scotland now at its highest level since 2001.

This blog briefly summarises the key results.

Latest nowcasts of the Scottish economy

Just before Christmas the latest estimates of GDP growth in Scotland, covering the 3^rd quarter of 2018, were released by the Scottish Government.

These data showed that growth in Scotland in Q3 was 0.3%, half the rate of the UK over the same period.

This represented a slowing of growth in Scotland relative to the previous quarter (in which growth was 0.5%).

Our latest nowcast for the Scottish economy covers the final quarter of 2018, and these suggest that growth in 2018 Q4 was 0.36% which, at an annual rate, is 1.46%. This is broadly in line with growth in the previous quarter.

The shape of economic growth in the UK and Scotland in the first three months of 2019 will of course be shaped by preparations for Brexit, and the extent of the resolution of the current uncertainty around Brexit.

Nevertheless we will provide an initial update in early February with our model predictions for growth in Q1 2019.