Projects, Scottish Economy

Orkney Islands Economic Review

This week we published the Orkney Islands Economic Review, commissioned by Orkney Islands Council. You can read the full report here.

Here we summarise the key findings from the report:

Orkney is a unique economy within Scotland and has a number of economic strengths that are evidenced throughout this report. We discuss the key opportunities and challenges facing this Island economy.

It is clear that Orkney is a relatively prosperous part of Scotland and does well on many economic measures, including “wider” measures of success such as wellbeing. However, we discuss many of the challenges when using current official statistics to properly measure the economy of Orkney. In looking at what is available for this crucial part of the Scottish economy, it is clear that the range of data available from the UK and Scottish governments do little to assist informed policy making.

The immediate outlook for growth in Orkney is of course dominated by the impact of the coronavirus pandemic. On balance, many of the economic effects of the pandemic should be temporary.

But in the short-run, the consequences have been enormous. Indeed, the stronger the public health response to the virus, the greater the ‘hit’ to the Orkney economy. There is a risk that any short-term disruptions evolve into something more serious.

Both the UK and Scottish governments have implemented a range of measures to support the economy. It is vital that everyone involved works together to not only protect the economy in the short-run but to limit any ‘hysteresis’ effects from taking hold.

We also discuss a number of long-term challenges for the Scottish economy, and how they are relevant to Orkney: these challenges have not gone away. Growth that is secured in the future needs to be sustainable, shared, and generate genuine local impacts. For example, Orkney, with its abundance of natural resources, has a crucial role to play in Scotland’s transition to a greener economy.

National policy must recognise that the Orkney Islands economy is very different to the Scottish economy, and to that of the other Island groups in Scotland. Care is needed when thinking about how national policy priorities may impact upon Orkney (as the implications might be quite different).

Similarly, Orkney’s economic make-up means its own priorities might look quite different to those for Scotland as a whole. We focus on a number of areas of opportunity in this report. These are consistent with an economy that will transition to become more low carbon, that will help support more young people to live and work in Orkney, that will respond to – and take advantage of – changes in technology, and will help build an economy that supports the local communities wellbeing.

We highlight eight key areas –

  • Energy
  • Tourism
  • Food & Drink (including agriculture)
  • Marine Economy
  • Digital Infrastructure & Research Environment
  • Traditional industries (including creative industries)
  • Community economic development
  • A Global Orkney

You can read the full report here.


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The Fraser of Allander Institute (FAI) is a leading economy research institute based in the Department of Economics at the University of Strathclyde, Glasgow.