Economist calls for fiscal discipline as Scotland’s economy lags other small countries

Scotland’s economy has “lagged behind” that of other advanced small nations, according to a report by globally renowned expert David Skilling who argues Scotland must practice fiscal discipline to stay competitive with them.

Dr Skilling, an economic adviser to governments, firms and financial institutions around the world, estimates in his report that Scotland’s GDP per capita to be $39,337 (£29,282) in 2017 – slightly lower than that of the UK and below that in 13 other comparator countries.

He has written the paper, “Policy insights for Scotland from small advanced economies”, for the independent think tank Reform Scotland and is part-funded by the Scottish Policy Foundation.

It shows the slowdown in the oil and gas sector has hit GDP growth in Scotland, while adding that being in the UK – which has “underperformed the rest of Europe by a significant margin over the past few years” – had also acted as a “drag on performance”.

The economic adviser looked at the performance of countries including Ireland, New Zealand, Norway, Sweden, Finland, Hong Kong and Switzerland, where GDP per capita was measured at $80,591 (£60,000), more than double the Scottish figure.

Dr Skilling said “Scotland’s economic performance has lagged that of other small advanced economies” and emphasises that Scotland should:

Reform Scotland Director Chris Deerin said: “This is an important contribution to Scotland’s economic debate by a respected global expert on small countries – a man who helped shape the findings of the SNP’s recent Growth Commission.

“The report is not about nationalism or unionism – it is about how we in Scotland can create the conditions for greater economic growth in order to raise our standard of living and better fund our public services.

“The lessons from the paper are clear. To achieve economic success, we must ensure our tax rates are competitive, that we have a high-quality business environment, and invest in human capital and innovation.”

Alison Moore, the Director of the Scottish Policy Foundation, said: “As Scotland’s grant-giving foundation for public policy research, the Scottish Policy Foundation is pleased to have been able to support this important piece of policy research on Scotland’s economy.

“Our mission is to encourage a flourishing debate on issues of public policy that are important to us here in Scotland, and the Reform Scotland / David Skilling paper is one of a number that we are currently funding to add to the debate around Scotland’s economy and productivity.

“This paper is a valuable addition to the debate on our economy, and we look forward to continuing to support this debate through our ongoing work.”

A Scottish Government spokeswoman said: “Scotland’s economy is strong, with output per head among the highest in the UK outside London and the south-east. We are also one of the top destinations for inward investment while Scottish productivity has grown faster than the UK’S over the past decade.”

The issues highlighted in the report will be discussed at a political debate with David Skilling, the SNP’s Kate Forbes MSP, the Conservatives’ Murdo Fraser MSP and Labour’s Jackie Baillie MSP at an event on the morning of Thursday 7th June.