Donald JR MacRae

Lloyds TSB Scotland

12th April 2005

Scotland’s Business Growth

Enterprise and Culture CommitteeThe Scottish Parliament

Scotland - The Gap?

Source: Measuring Scotland’s Progress Towards Smart, Successful Scotland 2004.

4 3 2 1

Scotland’s Quartile Position in OECD Countries 2002No. of

Comparators

30

18

11

21

26

9

2930

30

29

2815

Overall Progress

GDP per head

Growing Businesses

New business starts per 10k head pop.

% of businesses trading on-line

Business R&D as % of GDP

Relative productivity levels

Global Connections

Cost & coverage of broadband

% employers exporting

Graduates as % of workforce

Net migration as % population

Skills & Learning

Employment rate

% of 16-19 year old NEET*

% in employment undertaking training

* Not in education, employment or training.

0

40

80

120

160

200

240L

uxe

mb

ou

rg

US

A

No

rway

Eir

e

Sw

itze

rlan

d

Can

ada

Den

mar

k

Net

her

lan

ds

Au

stri

a

Icel

and

Au

stra

lia

UK

Bel

giu

m

Sw

eden

Fra

nce

Jap

an

Fin

lan

d

SC

OT

LA

ND

Ger

man

y

Ital

y

OE

CD

Sp

ain

New

Zea

lan

d

Ko

rea

Gre

ece

Po

rtu

gal

Cze

ch R

epu

bli

c

Hu

ng

ary

Slo

vak

Rep

ub

lic

Po

lan

d

Tu

rkey

Index: OECD = 100GDP per Capita - 2002 PPPs

Source: OECD (2004), DTI: Regional Competitiveness & State of the Regions (May 2004).

Note: Scotland estimated at 94.6% of UK.

high income high middle income group low middle income group group 101-120 51-100 over 120

International Comparisons of GDP Growth 1973 - 2001

5.2

3.33.0

2.8 2.82.6

2.3 2.2 2.1 2.01.8

1.6

Irel

and

No

rway

Can

ada

Un

ited

Sta

tes

Jap

an

Fin

lan

d

Ital

y

Fra

nce UK

Ger

man

y

Sw

eden

Sco

tlan

d

Country

Growth, per cent

Source: Goudie (2003).

Key Drivers of Productivity Improvement

• Human capital

• Physical capital

• Innovation

• Enterprise

• Competitiveness

Population Trends: Scotland and UK, 1951-2011

Source: Scottish Executive (2000).

UK

Scotland

Index:1995 = 100

Scotland’s Birthrate in a European Context

1.241.25

1.29

1.291.42

1.50

1.571.651.69

1.69

1.731.74

1.90

1.90

Italy

Spain

Germany

Greece

Portugal

Scotland

Sweden

Belgium

England

Netherlands

Finland

Denmark

France

Ireland

Total Fertility Rate* 2001

Source: Turner, A., Reflections on the Allander Series. (2004).

* Children per woman

Assumed Annual Long Term Migration by AgeScotland 2006-2007 onwards

4,000

3,000

2,000

1,000

0

-1,000

-2,000

-3,000

Persons

0-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65 & overYears of Age

Source: Experian Business Strategies, March 2005.

GDP per Hour Worked 2001

132.9119.9 118.1

100.0 95.787.2

France USA Germany UK Scotland Japan

Index: UK = 100

Source: Scottish Economic Report November 2004.

% working age population in employment OECD

% 16-19 year oldsNEET* OECD

% 20-24 year oldswith at least NVQ 3 UK

% young people with adequate skills (PISA) OECD

% working age populationin education, training UKor employment

Scotland - Skills and Learning

Indicator Quartile Position Comparators

4 3 2 1

Source: Measuring Smart Successful Scotland (2004). Training and Employment Unit, University of Glasgow.

* Not in education, employment or training.

Business R & D Expenditure

as % Output 1990-98

0.62

1.351.45

1.77

1.98

USA Germany France UK Scotland*

%

Source: Crafts and O’Mahony (2001) and DTI (2001).

*1995 - 99

Source: Global Entrepreneurship Monitor, Scotland 2003.

New Business Activity

Scotland

United Kingdom

Ireland

Aggregate Government Expenditure

0

10

20

30

40

50

60

Scotland UK

Source: Goudie (2002). Scottish Executive, GERS 2002-2003.

78-

79 79-

80 80-

81 81-

82 82-

83 83-

84 84-

85 85-

86 86-

87 87-

88 88-

89 89-

90 90-

91 91-

92 92-

93 93-

94 94-

95 95-

96 96-

97 97-

98 98-

99 99-

00 00-

01 01-

02 02-

03

% share in GDP, 1978-79 to 2002-03

Aggregate Government Expenditure % Share GDP 2003

58

56

55

52

51

51

51

50

49

49

49

48

47

47

43

40

35

Sweden

Denmark

France

SCOTLAND 2004**

Belgium

Austria

Finland

SCOTLAND 2002-03*

Italy

Germany

Netherlands

Portugal

Greece

Luxembourg

UK

Spain

Ireland

Source: Verhulst et al. (2005). *GERS 2002-2003; **Author’s calculation

Scotland - The Gap?

Source: Measuring Scotland’s Progress Towards Smart, Successful Scotland 2004.

4 3 2 1

Scotland’s Quartile Position in OECD Countries 2002No. of

Comparators

30

18

11

21

26

9

2930

30

29

2815

Overall Progress

GDP per head

Growing Businesses

New business starts per 10k head pop.

% of businesses trading on-line

Business R&D as % of GDP

Relative productivity levels

Global Connections

Cost & coverage of broadband

% employers exporting

Graduates as % of workforce

Net migration as % population

Skills & Learning

Employment rate

% of 16-19 year old NEET*

% in employment undertaking training

* Not in education, employment or training.