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


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.

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January 18, 2019

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.

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January 16, 2019

The latest Fraser of Allander Scottish Business Monitor

Yesterday, the latest Scottish Business Monitor (SBM) was published. The survey is supported by Royal Bank of Scotland.

2019 marks the 22nd year the SBM has been run by the Fraser of Allander. The survey provides a snapshot of activity in the Scottish economy well in advance of official data. It also acts as a gauge of future activity levels by monitoring the optimism level of firms.

The latest results

This latest Scottish Business Monitor covers activity up to the end of Q4 2018 and provides expectations to May 2020.

The FAI Business Activity Index sits at +10%. This is above the three year average of +5% but a fall of -6 since last quarter.

This latest data shows that the Scottish economy continued to grow in the final few months of 2018.

Our headline FAI Business Activity Index slipped a little from a net balance of 16% in Q3 to 10% in Q4. Whilst this is above the long-term series average, it is lower than businesses were expecting just three months ago. Small businesses appear to be the most gloomy.

Also of concern is the fact that businesses in Scotland are reporting not just a decline in investment – as has been the case now since early 2017 – but also a modest fall back in export activity.

See the full details of the publication here.

January 11, 2019

How does the Scottish Government assess the impact of its budget on tackling Child Poverty?

The Scottish Parliament has adopted statutory targets to substantially reduce rates of child poverty over the period to 2030. But to what extent will the policies set out in the government’s budget for 2019/20 contribute to the achievement of these targets?

The Scottish Government publishes complementary analysis alongside its budget each year that shows how it has taken due regard of its statutory duties to reduce differences in outcomes by protected characteristics and socio-economic disadvantage. The information provided in this Equality Budget Statement (EBS) provides the Scottish Government’s own assessment of how Budget spending will impact on equality and socio-economic outcomes in Scotland.

In this blog, the Joseph Rowntree Foundation and the Fraser of Allander Institute reflect on the insight that the Scottish Government analysis provides with regards to tackling child poverty.Continue reading

January 10, 2019

New Gross National Income figures for Scotland

Just before Christmas, the Scottish Government published updated experimental statistics on Scottish Gross National Income (GNI).

Remember, as we set out in May when these figures were first published, GNI statistics are interesting for a number of reasons – not least as they can add some insight into how much income is retained in Scotland relative to how much the country produces in a given year.

The latest figures show that Scottish GNI was estimated to be around £29,350 per head in 2017.

But the figures also show that Scottish GNI was estimated to equal 94.5% of Scottish GDP.

In other words, there continues to be a net outflow of income from Scotland to the rest of the UK and/or overseas. Indeed over the entire period of the data reported by the Scottish Government (i.e. 1998 to 2017), Scottish GNI has remained below GDP.

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January 8, 2019