Improving productivity could add £25bn to economy - CBI Scotland report

CBI Scotland has today said that sufficiently increasing productivity in Scotland could the economy north of the border by £25 billion over the coming decade.

A new report produced by the Confederation of British Industry found that while Scottish productivity levels are now about the same as the UK, both nations fall behind on international comparisons.

Research by the business body found “vast” regional disparities, with the highest performing Scottish council area found to be more than 50 per cent more productive than the lowest.

The report Pursuing Prosperity: Why Regional Productivity Growth Matters for Scotland’s Future found that Aberdeen city and Aberdeenshire were the most productive areas between 2004 and 2014, with Shetland at the bottom of the table.

The four areas identified as being behind that difference were educational achievement and skills training, transport and connectivity, management practices and innovation and exporting.

CBI Scotland has called for a productivity taskforce to be set up that will bring together government and business representatives to tackle the issue.

The researchers estimated Scotland’s gross value added, a measure of all the goods and services produced in the economy, if each region grew at the same rate it had done in the preceding decade. They found that the GVA would rise by 32 per cent to £163.6 billion by 2024. They also found that there would be a 53 per cent lift in GVA to almost £188.6 billion if every local authority matched the productivity growth of the best-performing areas.

CBI Scotland Director Hugh Aitken said: “Against a backdrop of EU negotiations and new revenue raising powers for the Scottish Parliament, there has never been a more important time to focus on improving productivity across Scotland.

“If we’re serious about generating sustainable, inclusive growth then unlocking regional productivity must be a priority.

“While productivity gains for Scotland overall should be welcomed, too many regions are being left behind.

“By bringing government and business together to focus on these four drivers we can go some way to making Scotland a more attractive destination for investment.

“With EU negotiations beginning this week, we hope that this report can be a timely reminder to the Scottish and UK governments of the need to remain focused on the economy.”

The report calls for more high-quality vocational options for 14 to 18-year-olds and greater collaboration between businesses and schools.

Recommendations on transport include improving connectivity between Scotland’s City Deal regions and with other parts of the UK, increasing broadband connectivity and reliability and exploring further the potential impact of the reduction and eventual abolition of Air Passenger Duty.

CBI Scotland wants the Scottish Government to set a target for combined public and private spending on research and development and for the UK Government to work with Scottish m inisters to explore options for involvement in research funding networks such as Horizon 2020 when the UK leaves the EU.

On exporting, the report urges both governments to ensure Scottish businesses have their voices heard as EU negotiations progress and encourages exporting firms to help non-exporting firms expand.

A Scottish Government spokeswoman said: “Scotland’s productivity growth has far outstripped the UK’s as a whole in recent years, as this report recognises – that improvement is welcome.

“It is an important boost to overall economic growth in all regions of the country.

“Scotland’s economy is strong, with latest figures showing the lowest unemployment rate on record, while we continue to be a top UK destination for inward investment.

“We are already working very closely with business and doing everything within our powers to boost productivity.

“Our £6.4 billion Infrastructure Investment Plan is supporting jobs and companies.

“Our Enterprise and Skills Review is focused on transforming the performance of our economy and enabling more businesses to deliver strong, vibrant and inclusive growth at scale.

“However, those strong economic foundations are threatened by Brexit and the prospect of being taken out of the world’s biggest single market – and we welcome the CBI’s support for the Scottish Government being directly represented in the Brexit negotiations.”