Higher income taxes and public spending in Scotland?

Since February’s Budget, there has been discussion about income tax in Scotland and public spending.

Oddly, the debate was sparked by adverts – rather good ones we might add! – on the Tube promoting Scotland as a place to live.

Some – such as London MP Greg Hands – have responded by arguing that moving to Scotland would mean paying higher taxes.

This has been countered by others who argue that whilst (some) taxes may be higher, the quid-pro-quo for paying more tax is higher public spending and benefits such as free University tuition, more generous childcare, free personal care, free prescriptions etc.

So who is right?

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March 11, 2020

When’s a bridge not a bridge? When it’s a tunnel, apparently…

It is perhaps a sign of the times that political stories, which wouldn’t even have seen the light of day in the past, gain traction.

The latest is the proposal of a bridge (although we’re told that was a metaphor, and it may now be a tunnel that’s being proposed) to link Scotland and Northern Ireland.

This is the idea – and this is not an April Fool – to consider a 21-mile road link between Scotland and Northern Ireland over the Irish Sea.

Somewhere, engineers will be debating the technical challenges of building a bridge over deep water, or a tunnel across a difficult underwater terrain. Geographers will be working out the average windspeeds that traffic will be able to withstand. And munition experts will be discussing how to avoid Beaufort’s Dyke.

But before this gets any further, hopefully the government will ask their civil service economists for some advice.

What will they say?

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March 9, 2020

Businesses show increase in confidence for the coming 6 months after a challenging end to 2019

  • The Fraser of Allander Business Monitor is one of the first major surveys of Scottish firms post-election.
  • The figures show that the outlook for business activity, investment and employment are at their highest level since 2014. This follows a challenging end to 2019 for all these indicators.
  • Expectations of growth in the Scottish economy over the next year have also improved, with more firms believing it will be moderate, and less believing it will be weak.

You can read the full Business Monitor here.

Scottish Business Monitor Dashboard

  Q4 2019 3-year average Change over quarter Change over year
FAI Business Activity Index (net % balance*) 5 80 -5 ▼
New Business 2 9 -1 ▼ -8 ▼
Turnover 4 9 -4 ▼ -9 ▼
Costs 63 54  7 ▲ 8 ▲
New Capital Investment -9 -7 -6 ▼ -5 ▼
Export Activity -11 0 -3 ▼ -5 ▼

Our principal indicator of activity – the FAI Business Activity Index – remained unchanged this quarter, and just below its three-year average.

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February 6, 2020

Economic statisticians, irony and Scotland’s latest trade statistics

Economists aren’t known for their sense of humour. Economics statisticians less so.

So it was highly ironic – albeit perhaps not very funny – that just two days before the UK’s departure from the EU, analysts in the Scottish Government published their latest annual account of Scottish exports.

As expected, much of the reaction concentrated on the importance of the EU for Scottish trade.

But the statistics also contain interesting information about the pattern of trade from Scotland more generally.

In this blog, we take a look at a couple of these trends, and notably the importance of manufacturing.

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February 5, 2020