New report from CBI Scotland reveals how unlocking regional productivity growth can bolster Scotland's economy.
20 December 2017
Update from the Scotland Director
In his last update as CBI Scotland Director, Hugh Aitken reflects on another busy month in an extraordinary year.
With 2017 winding to a close, it’s the perfect time to reflect on what has been a truly unforgettable year. From general elections to Brexit negotiations, industrial strategies to the beginning of the most talked about American presidency in history. This year really has had it all. At CBI Scotland, we’ve also embarked on something of a transition, bolstering the team and appointing a new chair and vice chair, launching a landmark report on regional productivity growth, Pursuing prosperity, and building the solid foundations we need to sharpen our campaigning efforts next year.
There was also one major hurdle to overcome before Christmas Recess – the draft Scottish Budget 2018/19. While there’s undoubtedly less pageantry than the Westminster equivalent, Derek Mackay’s announcement held no less significance. As we all know, Scotland’s economy has been on a rocky road for some time. Any green shoots of recovery that have emerged of late have been swiftly scythed down and we remain locked in what the Fraser of Allander Institute has called a “cycle of weak growth”.
So what is our take on the Scottish Budget?
While we remain concerned about the impact of tax rises for attracting and retaining talent, and added complexity in the Scottish tax code, Mackay’s focus on productivity enhancing measures was welcome. Since the publication of Pursuing Prosperity earlier in the year, we have been adamant that the only way to secure growth, fund sustainable public services and raise living standards is by boosting productivity – and on that front, the Scottish Government has delivered.
The Budget saw additional investments in business R&D, transport, digital connectivity, education and additional funding for City Deals. We also saw welcome support for the new Scottish National Investment Bank, the introduction of the new Building Scotland Fund and huge progress on business rates. We have long championed the full implementation of the Barclay Review recommendations and the linking of rate increases to CPI instead of RPI – this formed a key pillar of our submission ahead of the Scottish Budget and we're pleased to see these measures being taken forward.
While there were many things to applaud, there was still a sting in the tail when it came to the anticipated changes to income tax. While Mackay’s nimble approach has won the support of many commentators it remains to be seen how the changes will affect Scottish businesses and their ability to attract much needed talent. We must be absolutely clear, safeguarding Scotland’s competitiveness is critical at a time when our economy is struggling.
On Brexit, we witnessed a major breakthrough earlier this month – even if it did occur at an unexpectedly early time on a Friday morning. For companies across Scotland the additional clarity provided by the agreement is hugely welcome and there is an overwhelming desire to quickly move onto phase two and the all-important negotiations on trade. We have some amazing exporters here in Scotland, including some market-leading brands, and we also have firms that are reliant on global supply chains. Being able to better understand the nature of our future trading relationship with Europe is essential for businesses across Scotland.
Unfortunately, this month has also been tinged with disappointment as we learned that Paisley was not chosen as the 2021 UK City of Culture. Awards like this can be a real catalyst for positive change and it is a real shame that Paisley will not be able to benefit from the regeneration effect that so often comes with awards of this nature. Nonetheless, we were proud to support the bid put forward by the amazing Paisley team and we know they will use the momentum generated by the bid to press ahead with improving the lives of the people of Renfrewshire.
As many, if not all, of you know by now this is my final update as Director of CBI Scotland before I pass the baton to Tracy in January. Since I’ll be staying at CBI Scotland into next year, to help manage a number of key projects and champion the work of the organisation, I’ll spare you all the lengthy note of thanks that usually accompanies this kind of announcement. Having said that, I would like to take a brief moment to wish Tracy well in the role and to thank the team for their exceptional work – 2018 is set to be a really exciting year for CBI Scotland.
Wishing you all a merry Christmas and a happy new year!