A report published on Wednesday by Oxford Economics, commissioned by The Hunter Foundation, argues that radical and ambitious policy changes are required if Scotland’s economic performance is to be transformed within the next 15 years.
The “Raising Scotland’s Economic Growth Rate” report from the influential consultancy Oxford Economics is designed to inform strategy of entrepreneur Tom Hunter’s foundation and initiate a national debate with all political and interested parties in the UK and Scotland to help shape policy for transformational growth.
“The aim is to address such issues as low productivity, poor business birth rate and lack of success with scale-ups that help to explain why Scotland’s GDP per head is a mere 44% of Singapore’s level, 48% of Ireland’s, 68% of Norway’s and 75% of Denmark’s,” said The Hunter Foundation.
“The report finds that ‘it is not realistic to think that the current economic policies of either the UK or Scottish governments will produce a transformation of Scotland’s economic performance.’
“Indeed, nor will they for the UK as a whole.”
The report puts the case for policies that go beyond current government boundaries, and considers various options under three headings:
- Increases in government borrowing to stimulate stronger growth in demand and output
- Significant tax cuts and deregulation to improve competition and incentives in the economy
- Large increases in government support for businesses, either directly or through increased spending on infrastructure, education and skills, innovation and the green economy
It says these approaches are not mutually exclusive and, if there is to be radical change, “there is a strong case for a combination of all three.”
The report argues that drastic change is clearly required as Scotland’s economy lags behind some other countries to such an extent “that it would need a business comparable in size with Google’s total global output” to bring its GDP per head of population up the level of Norway’s.
In terms of government support and intervention, the report recommends an ambitious industrial policy, possibly centred around Scotland’s renewables industry, tapping into its rich tidal, wave and wind resources.
The report also notes on the Scottish National Investment Bank (SNIB): “Given its wide remit, the £2 billion funding for the SNIB does not appear to be particularly generous.
“But additional funding would only be likely to have an impact on Scotland’s growth rate if there was a clear focus on achieving that as a goal—together with sufficient oversight and transparency to ensure that funds were suitably allocated (and reallocated when needed).”
Tom Hunter of The Hunter Foundation said: “It is for everyone in Scotland, from governments, policy makers and businesses to help solve the problem of poor economic growth that Scotland has faced for too many years.
“I fully agree with the findings of this far-reaching new report that radical economic policies are needed if Scotland’s economy is to be transformed.
“The report tells us Scotland would need to make changes equivalent in their impact to creating a business comparable in size with Google’s total global output to bring its GDP per head up the level of Norway’s.
“Moreover, we need far more focus in our economic investments not only to make significantly better gains but also to understand what’s working and what’s not.
“But that is only half the picture — we need to embed innovation in health and education and poverty reduction to free up finance to invest in growing our economy.
“I hope the calls made in the report for more, and different, economic stimulation from governments, tax cuts and deregulation, and appropriate and targeted state interventions, for example in renewables, will be listened to and acted upon.
“I’m calling on governments, politicians of all parties, industry and interested parties to work together to pave the way for transformational measures that will give the Scottish economy the significant boost it needs.
“Let’s use Covid-19 to reinvent what our future looks like.”
Richard Holt of Oxford Economics said: “The findings of our report emphasise the scale of change and intervention that is needed to address Scotland’s long-standing economic problems.
“Much is being done, but if political leaders want to close the gap with comparable nations, then they need to go beyond their present policy offers.”