David Hume Institute calls out politicians as report describes a decade of Scottish productivity stagnation

Scotland’s productivity over the past fifteen years has remained “broadly stagnant” and has “underperformed compared with many other European countries”, the report states.

While Scotland was found to be more productive than most other regions of the UK, this comparison, the institute cautions, is limited as the UK as a whole has lower productivity than many other advanced economies.

The independent policy think tank says a “concerted effort” is required if living standards are to improve.

The study also takes aim at political leaders by claiming there has been no progress towards a Scottish government target to improve productivity rankings.

The institute’s Wealth of the Nation report focussed on a key economic challenge facing Scotland - how to boost productivity.

It found that for more than a decade, Scotland has seen no significant rise in wages as productivity growth has all but stalled, despite a well-educated workforce.

The think tank stated there had been “no progress” towards a target set by ministers in 2007 to improve Scotland’s productivity rankings.

The report also said while the UK as a whole was “at the centre of a so-called productivity puzzle”’ which had seen growth slump to “virtually zero”, the slowdown had started earlier in Scotland.

Although Scottish government capital spending has been above the UK average, the report added it still “lagged considerably behind other developed countries”.

The institute makes recommendations for government, policymakers, business and trade unions, based on the conclusions of its new research and case studies.

It details five evidence-based stories of what has worked in comparable places and draws lessons from their experiences. In each case a ruthless focus on evidence, building consensus across the political divide, and developing strong and credible institutions were all necessary to turn things around.

It said political parties, business and trade unions must work much more closely to find evidence-based, workable solutions.

Institute director Jane-Frances Kelly said “We are not the first country to face this challenge but - as our research shows - politicians and policymakers need to get their act together and make choices guided by evidence. Failing to do this will put the Scottish economy at risk.

“Our research has looked at London, Manchester, Sweden, Australia and Ireland - and in every case we found that a ruthless focus on evidence, building consensus across the political divide and creating strong institutions were crucial to turn things around.”

Reacting to the findings, the Scottish government insisted the economy was “fundamentally strong”.

Public finance minister Kate Forbes said: “Over the last decade, productivity in Scotland has grown at more than three times the rate it has across the UK as a whole.

“Our productivity growth has been higher than any other country or region of the UK, including London, with productivity increasing by 1.7 per cent in the first quarter of this year.

“Scotland’s economy is fundamentally strong but we are determined to strengthen it further and will consider the points raised in this report.”