Perception and independence of economic statistics

This afternoon, the Scottish Parliament will debate a proposal by the Economy, Jobs and Fair Work Committee for a Committee Bill on Pre-release Access.

This is unusual. Most bills are put forward by government rather than Committees. So this is an important event and covers an crucial aspect of the economic landscape in Scotland.

Back in 2017 & 2018, the Committee undertook an inquiry into economic statistics in Scotland

One of their recommendations (by split decision), was that the practice of pre-release access – where Ministers and certain political appointees are briefed about the content of ‘market sensitive’ statistics in advance of the public release of the figures – should be stopped.

So far, the Scottish Government has resisted such calls.

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September 19, 2019

Today’s Scottish GDP figures: the stockpiling aftermath

Today, the Scottish Government published their growth estimates for the second quarter of 2019 – with the results suggesting that the Scottish economy contracted by -0.3% in Q2 2019.

These estimates broadly mirror the trends we’ve seen at the UK level, where over the same period, UK output contracted by -0.2%.

Recall that today’s figures come on the back of strong growth in Q1 of this year. Over the first three months of 2019, the Scottish economy grew by +0.6%.

As we argued back then, movements in Scottish GDP data have been impacted by the stockpiling that has been taking place as a result of Brexit.

Uncertainty surrounding a no-deal Brexit back in March led many firms to build up their supplies, leading to a boost in GDP in Q1. As the deadline of the UK’s departure from EU moved forward to October, and immediate no-deal panic preparations calmed, firms have since unwound these preparations leading to GDP in Q2 slipping back.

Two immediate reflections. Firstly, it is important in these times to focus upon longer-term trends and not the volatile quarter-to-quarter changes. Here again, we see Scottish growth remaining fragile and well below trend.

Secondly, we’ve seen emerging UK data suggest that activity has picked up over the summer months. This suggests that the likelihood of a technical recession over Q2 and Q3 of 2019 – i.e. two consecutive quarters of negative GDP growth – remains relatively small (but not impossible).

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September 18, 2019

Developing indicators of aggregate inclusive growth Part 1: is wellbeing the new GDP?

There has been widespread discussion over the weaknesses of ‘traditional’ metrics such as GDP to track economic performance.

In the long-run, whilst GDP can be correlated with better ‘outcomes’ – including living standards – it does not capture how any improvements are shared across society. Moreover, whilst a growing economy can help deliver technological benefits and better public services, GDP doesn’t tell us whether or not such growth is environmentally sustainable.

In July, the First Minister provided a TED talk “Why governments should prioritize well-being”. The talk, viewed over 1 million times, attacked GDP as a tool for policymakers.

Such an argument isn’t new, or limited to one side of the political spectrum. FM’s speech was similar to a speech by David Cameron in 2010. In his speech, he stated that “I do think it’s high time we admitted that, taken on its own, GDP is an incomplete way of measuring a country’s progress.”

So what are the alternatives?

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Our work as part of the Global Environmental Measurement and Monitoring Group

On Friday, we hosted the second Global Environmental Measurement and Monitoring (GEMM) Network at Strathclyde.

GEMM is a network of scientists, engineers, economists, lawyers and policymakers who are all seeking to better understand how changes in our environment will impact our economy and society.

The initiative was established by Strathclyde in partnership with The Optical Society (OSA) and the University of Stanford’s Stanford Photonics Research Center. The first meeting took place in Stanford in 2018.

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September 16, 2019