Rural Development Council8th December 2008

Contents

• Scottish Enterprise FocusEconomic DownturnImplications & ActionsCore Rural Objectives

• HIEEconomic downturnImplications Actions

• Challenges

Framework - Scottish Government’s economic strategy

To create a more successful country, with opportunities for all

of Scotland to flourish, through sustainable economic growth.

• Productivity and competitiveness

• Participation in the economy

• Increasing the population

• Shared and sustainable

Review of the Enterprise Networks

• Scottish Enterprise’s infrastructure activities to focus on projects of regional or national importance

• Careers Scotland and lead responsibility for skills programme delivery to transfer to Skills Development Scotland

• Business Gateway Contract Management and local regeneration activities to transfer to local authorities

Focus on building the competitive advantage of Scotland’s key industries and businesses to sustainable economic growth

The reforms to the Enterprise Networks, announced by Cabinet Secretary, Finance & Sustainable Growth,

September 2007:

Focus of Industry Demand

Generate critical mass

More company growth

Maximise existing assets

Increase access to risk capital

Exploit knowledge base

Broaden company innovation

Enterprise Investment Innovation

Increase the scale and speed to market of high growth start-ups.

More intensive, strategic engagement with firms that have growth potential.

Support growth firms in key business areas:

• Innovation

• Internationalisation

• Investment

• Efficiency

Attract added value FDI.

Create world class business infrastructure for growth companies and priority industries.

Increase leverage from public funds by attracting more private risk capital to invest in Scotland.

Attract specialist investment in priority industries.

Enable wider innovation across the business base.

Improve industry demand for new licences / collaborative ventures with the academic base.

Utilise demand from priority industries to bundle IP into larger scale successes.

Create a culture of continuous innovation.

Innovation, Investment & Enterprise Focus, Driven by Industry Demand

Economic Downturn

• Uncertainty

• Confusion

• Dominating headlines

• Survey evidence pointing to dramatic weakening in levels of business activity and confidence

• Personal review with all account managed companies

Economic Downturn – Issues facing our customers

• Access to finance – cash flow, overdraft facilities, payment periods, finance costs, equity

• Cost pressures

• Contracts being delayed/cancelled

• Customers downgrading

Impact

• Fall in revenues

• Delaying investment

• Staff redundancies

• Reviewing costs

• Diversification and new market development

Feedback from key industries

• Tentative evidence that service sector worse than manufacturing

• Food & Drink

• Tourism

• Energy

• Forestry

Scottish Enterprise

• Increased demand for efficiency programmes

• Investment programmes

• Innovation

• Face the Challenge

Scottish Enterprise and Rural Operations

• Enterprise, Innovation and Investment agenda

• Rural Growth and economically important businesses

• Rural economic diversification with focus on Scotland’s priority industries

• Enabling investment in rural areas

• Implementing operational agreements with partners

Rural Operations - some key projects

• Planning to Succeed

• Rural Leadership

• Rural Petrol Stations

• LEADER

13

Current Economic Situation

• House prices falling

• Fluctuating oil and food prices

• Changing pattern of household expenditure

• International economic climate

• Inflation high (but now falling)

14

Highlands and IslandsEconomic Climate Review

• Wide-ranging review of changing economic conditions

• Likely implications for the Highlands and Islands

• HIE response to new situation

15

Implications: Highlands and Islands• A slow down in the housing market - substantial

reduction in new private house building

• Reductions in businesses and households obtaining credit from banks

• Major industrial or commercial developments depending on a private housing element being delayed

• Evidence of businesses holding back and reporting reductions in domestic spending on their goods and services

• Increase cost of money having detrimental impact on the viability of profitable businesses

16

Creative Industries

17

Energy

a world-class resource

18

Financial and Business Services

19

Food and Drink

20

Life Sciences

21

Tourism

22

Construction

23

HIE Response

• Support implementation of Economic Recovery Plan:

– One-to-one advice sessions– Dedicated business helpline– Local business clinics– Enhanced on-line information, advice and toolkits– Business masterclass programme– Targeted interest relief grants– Acceleration of capital projects

Challenges/Opportunities?

• Response to Economic downturn

• Global outlook

• More value from renewables, tourism, local

• Getting more economic output from public funding review fit/use of existing programmes – e.g. LEADER, Priority 4 ERDF

• Widen out use of proven projects e.g. Planning to Succeed