By Keith Aitken in Edinburgh | 20 June 2011
Scotland’s economy has kept pace with the UK’s since devolution, and on some measures outperformed it, an influential think-tank said today.
A sectoral analysis, published by Glasgow University’s Centre for Public Policy for Regions, suggests that the UK economy grew faster than Scotland’s in the first period of devolution from 1999 to 2003, with the positions reversing between 2003 and 2007. Since 2007, the two economies have shrunk at broadly similar rates.
Most of the relative differences are accounted for by manufacturing and construction. In the early years of devolution, Scotland was still shedding the electronics jobs brought in through inward investment in the 1980s and 1990s. But between 2003 and 2007, Scottish manufacturing and construction grew at almost thrice the UK rates.
Both sectors have continued to do better – or less badly – than their UK counterparts in the recent years of economic decline, almost offsetting a harder hit for Scotland in business and financial services. Scotland’s much-vaunted financial services boom appears to have been concentrated in the very early years of devolution.
Commenting on the findings, CPPR’s John McLaren, one of the authors of the study, said: ‘An improved relative economic performance has been a key goal of successive Scottish governments. There now exists some evidence that it is being achieved.’
But the weekend also brought a gloomier forecast for the Scottish economy. The Ernst & Young Scottish Item Club of economists scaled back its growth predictions for this year and next, and estimated that more than 50,000 Scottish public sector jobs would be lost over the next four years.
Although the Item Club study acknowledged that some areas of Scottish manufacturing were still performing robustly, it did not see manufacturing as a significant source of new jobs. The study warned that the sector could actually shed up to 10,000 posts as it strove for greater competitiveness and productivity.
The club saw business services as the likeliest source of jobs growth, despite fears in some quarters that Scottish private sector services could grow more slowly than in the rest of the UK because of a heavy dependence for sales on a shrinking public sector.
