Fraser of Allander Institute Blog

The transition to a low carbon energy future and its employment implications

Dr Grant Allan and Dr Andrew Ross
Fraser of Allander Institute, Department of Economics, University of Strathclyde

The low carbon transition calls for ‘system change’ as Greta Thunberg, the 16-year-old Swedish climate activist, puts it so eloquently. Despite of the progress made, e.g. the phasing out of coal, a 100% low-carbon energy future is still a long way off for the UK.
It is clear, however, that changes in energy supply in the coming decades are likely to have major economic implications.

In our research, we examine the scale as well as the skill characteristics of employment related to current energy activities in the UK. This helps to understand the possible employment consequences of this transition.Continue reading

VAT assignment: paused for now, but will it be pulled for good?

The Scottish Government announced last week that the assignment of Scottish VAT revenues to the Scottish budget is likely to be delayed – possibly until after the fiscal framework review in 2022. Giving evidence to the Finance and Constitution Committee last week, Derek MacKay said: ‘I am becoming increasingly minded to postpone VAT assignment until VAT powers can be further discussed at the time of the fiscal framework review’.Continue reading

Is the Scottish budget for 2019/20 disadvantaged by UK Government policy decisions on income tax?

Is the Scottish budget for 2019/20 disadvantaged by UK Government policy decisions on income tax? The Scottish Government argues that it is. The government’s case is reasonable – but potentially undermined by its own stated policy commitments.

The Smith Commission identified two ‘no detriment’ principles which it said should apply to Scotland’s new fiscal framework.

The first was that there should be ‘no detriment’ simply as the result of the initial transfer of a particular power.

The second – and the one relevant to this blog – was that neither government should face detriment as a result of a policy decision taken by the other. Specifically, ‘where either government makes a policy decision which effects the revenues or expenditure of the other, the decision-making government should reimburse the other where there is an additional cost, or receive a transfer if there is a saving’.Continue reading

May Scottish Economy Nowcasts

This morning the latest UK data for growth in Q1 2019 were released. These put UK growth at 0.5% in Q1, with growth in production, construction and service sectors.

In this blog we release our nowcasts of the Scottish economy in Q1 2019 and Q2 2019.

The UK numbers were stronger than growth in the previous quarter (which was a disappointing 0.2%), and stronger than might have been expected.

Addendum – a quick note about GDP including oil

A few people have got in touch since we published yesterday’s blog to ask why oil and gas isn’t included in the headline real-terms GDP growth series that the Scottish Government publish in their National Accounts, and what the series might look like if it was included. The Scottish Government don’t publish this series, although they do publish it in nominal terms (and is the source of the per capita figure we discussed yesterday).

It is entirely possible to include it and perhaps a fully comprehensive suite of National Accounts might wish to do that. We have a few back-of-the-envelope calculations to look at this, using the published UK series for offshore extraction and weighting that in to the Scottish series.