SCOTLAND: CELTIC LION OR TIM’ROUS BEASTIE?Donald JR MacRaeLloyds Banking Group ScotlandUNIVERSITY OF EDINBURGH17th Septemb...
SCOTLANDThe Country one of oldest in Europe – kingdom formed 843AD, 1,169 years ago land mass 78.8km² - 60% of EnglandTh...
SCOTLANDThe Government formed Great Britain 305 years ago with England and Wales Scottish Parliament re-established in 1...
SCOTTISH GDP QUARTERLY CHANGE                                                                                  Change     ...
SCOTTISH GDP QUARTERLY CHANGE                                                                   GDP Quarterly Change    Qu...
BANK OF SCOTLAND PMI AND GDP QUARTERLY CHANGE                                                Improvement                  ...
ON ECONOMIC GROWTH “Little   else is requisite to carry a state to the highest degree of  opulence from the lowest barbari...
GDP PER CAPITA - CURRENT PPPs (2010)            Index: OECD = 100            high income                                  ...
GDP PER CAPITA      1970-2010 – 40 YEARS                                                                        Constant P...
SCOTLAND’S LONG TERM GROWTH PERFORMANCE (2000-2009)                                                                  Ten Y...
SCOTLAND – RECENT ECONOMIC PERFORMANCE             %                  Economic Performance - GDP Growth 2009            -1...
POPULATION: NATURAL CHANGE AND NET MIGRATION                                            Natural Change and Net Migration, ...
POPULATION: NATURAL CHANGE AND NET MIGRATION                                            Natural Change and Net Migration, ...
PROJECTED PERCENTAGE POPULATION CHANGEIN SELECTED EUROPEAN COUNTRIES 2010 - 2035                                          ...
GDP PER HOUR WORKED (INDEX: USA = 100) 2010                                                  GDP per hour worked (USA=100)...
Korea                                                                                                                     ...
Korea                                                                                                                  Fin...
Finland                                                                                                                   ...
0                                                                                                                         ...
UNIVERSITY SPIN OUT COMPANIES PER MILLION POPULATION       2001-02 TO 2006-07Source: Scottish Government (2009). Scottish ...
BUSINESS R & D EXPENDITURE AS % OF GDP                                                    as % of GDP 2001-2010      %    ...
BUSINESS DENSITY                                           Scotland 267th from 349 European regions/countries             ...
NATIONAL 2011 TOTAL ENTREPRENEURIAL ACTIVITY (TEA) ACTIVITYRATES FOR 23 SOVEREIGN INNOVATION DRIVEN NATIONS AND SCOTLAND  ...
THE GLOBAL ENTREPRENEURSHIP INDEX AND GDP       PER HEAD PPP                           HIGH GLOBAL ENTREPRENEURSHIP INDEX ...
ESTABLISHED BUSINESS OWNER/MANAGER RATIO(Proportion of owner/managers of businesses more that 3½ years old in the working ...
ESTABLISHED BUSINESS/OWNER RATES AND TEA RATES       FOR SCOTLAND, UK AND SMALL DEVELOPED COUNTRIES       *               ...
THE ENTREPRENEURIAL EFFECT?         “A cut in the corporate tax rate by 10 percentage points             will raise the an...
HIGH GROWTH FIRMS IN SCOTLAND                                    ~ 1,500 in Scotland    Create around 50% of all new priv...
BUSINESS ANGEL INVESTMENT ACTIVITY 2007-2011                  70            £m                  60                  50    ...
STRENGTH IN SCIENCE BASE            Citations per million GDP (rebased)                                                   ...
STRENGTH IN ENERGY                             GVA £21.9bn (2008); GVA annual growth rate 15.6% (1998-2008)               ...
BEATRICE 1 TURBINESource: Scottish Enterprise (2011).   32
OYSTER MARINESource: Scottish Enterprise (2011).   33
OYSTER 800 WAVE POWERSource: http://www.aquamarinepower.com/technology/how-oyster-wave-power-works/
OYSRER 800 IN ACTIONSource: http://www.aquamarinepower.com/technology/how-oyster-wave-power-works/
STRENGTH IN LIFE SCIENCES     Scotland – in top 5 world locations for life sciences       Gross Value Added (GVA)         ...
NORTH SEA REVENUES (£BN)                                                                                                  ...
SHARE OF HIGH-GROWTH FIRMS IN SELECTED OECD       COUNTRIES 2005       EMPLOYEE BASED MEASURE                             ...
SCOTLAND – REASONS TO ROAR?   Population increasing   Energy – Scotland has 25% of Europe‟s renewable resource in       ...
SCOTLAND – CELTIC LION OR TIM’ROUS BEASTIE?   Immigration   More business   Business R&D   Business training & ambitio...
SCOTLAND: CELTIC LION OR TIM’ROUS BEASTIE?Donald JR MacRaeLloyds Banking Group ScotlandUNIVERSITY OF EDINBURGH17th Septemb...
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Scottish Economy Talk with Donald MacRae (17 Sept 2012)

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This is the annual Scottish Economy Talk, being given this year by Donald MacRae of Lloyds Banking Group. Donald will give an overview of the Scottish economy within an international context, its drivers and insights into its future development. For students from outside Scotland this should provide you with invaluable insights into the composition and dynamics of the country's economy.

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Scottish Economy Talk with Donald MacRae (17 Sept 2012)

  1. 1. SCOTLAND: CELTIC LION OR TIM’ROUS BEASTIE?Donald JR MacRaeLloyds Banking Group ScotlandUNIVERSITY OF EDINBURGH17th September 2012
  2. 2. SCOTLANDThe Country one of oldest in Europe – kingdom formed 843AD, 1,169 years ago land mass 78.8km² - 60% of EnglandThe People population of 5.25m, 8% of UK population density of 64 people per km² - UK 248 population growth of 0.63% in 2010/11 largely due to net inward migration of 27,000 2
  3. 3. SCOTLANDThe Government formed Great Britain 305 years ago with England and Wales Scottish Parliament re-established in 1999 with devolved powers on economic development, health, education, justice, rural affairs and transport; further devolved powers underway Scottish Government budget (TME*) of £33.9bn in 2012-13The Economy GDP of £145bn (with oil) key sectors – energy, tourism, financial services growth forecast for 2012: +0.4%. * Total Managed Expenditure 3
  4. 4. SCOTTISH GDP QUARTERLY CHANGE Change GDP Quarterly Change Quarterly % Recession change in GDP 1.3 0.9 0.7 0.6 0.5 0.3 0.3 0.3 0.1 0.1 0.1 0.2 0.1 -0.1 -0.1 -0.1 -0.5 -1.0 -1.5 -1.5 -1.8 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2007 2008 2009 2010 2011 2012 Month/YearSource: Scottish Government (July 2012). 4
  5. 5. SCOTTISH GDP QUARTERLY CHANGE GDP Quarterly Change Quarterly % Recession Recovery Recession change in GDP 1.3 0.9 0.7 0.6 0.5 0.3 0.3 0.3 0.1 0.1 0.1 0.2 0.1 -0.1 -0.1 -0.1 -0.5 -1.0 -1.5 -1.5 -1.8 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2007 2008 2009 2010 2011 2012 Month/YearSource: Scottish Government (July 2012). 5
  6. 6. BANK OF SCOTLAND PMI AND GDP QUARTERLY CHANGE Improvement Deterioration 6
  7. 7. ON ECONOMIC GROWTH “Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things.” Adam Smith (1755). 7
  8. 8. GDP PER CAPITA - CURRENT PPPs (2010) Index: OECD = 100 high income high middle income group low middle income group low income group over 120 101-120 51-100 group 0-50 250 225 200 175 150 Scotland 125 100 75 50 25 0 Luxembourg USA Italy Iceland Austria Denmark Australia Mexico Switzerland Belgium Germany Czech Republic Eire UK Japan Spain Korea Greece Norway Canada Finland Netherlands Portugal Sweden France OECD Hungary Poland SCOTLAND New Zealand Slovak Republic Scotland with N S oil Turkey Note: Scotland estimated at 98.7% of UK.Source: OECD. National Accounts at a Glance 2011 (2012), BIS: Regional Economic Performance Indicators (May 2012). 8
  9. 9. GDP PER CAPITA 1970-2010 – 40 YEARS Constant Prices, Annualised Growth GDP per Capita 3.3 2.5 2.4 2.3 2.3 2.2 1.9 1.8 1.7 1.6 Ireland Norway Portugal Finland Iceland Austria OECD Scotland Sweden Denmark CountrySource: McLaren. J. (2012). Economic Growth – past trends and future prospects of advanced economies. FAI Economic Commentary. Vol 36 No. 1. 9
  10. 10. SCOTLAND’S LONG TERM GROWTH PERFORMANCE (2000-2009) Ten Year Average GDP Growth Rate (2000-2009) % % 4.7 4.4 4.0 3.8 3.7 3.7 3.6 3.6 3.4 3.2 3.1 3.1 2.9 2.6 2.4 2.3 2.1 2.1 2.0 1.9 1.9 1.8 1.8 1.7 1.7 1.7 1.6 1.6 1.5 1.4 0.9 0.9 0.8 0.7 0.5 Norway Switzerland Italy Hungary Czech Republic Sweden Slovenia New Zealand Turkey Germany Portugal Korea Poland Chile Israel Spain Canada Japan Ireland Iceland Finland Mexico Austria Australia France Greece United States Netherlands Slovak Republic OECD-Total SCOTLAND Belgium United Kingdom Luxembourg Denmark Country Source: OECD (2011). National Accounts at a Glance 2010. Scottish Government (2011). 10
  11. 11. SCOTLAND – RECENT ECONOMIC PERFORMANCE % Economic Performance - GDP Growth 2009 -1.4 -2.5 -2.6 -3.7 -3.9 -4.7 -5.1 -6.5 -7.6 -8.0 Norway Scotland* Portugal Luxburg Austria Denmark Sweden Iceland Ireland Finland Small European Countries * Q4 2009 v Q4 2008Source: OECD (2011) and Scottish Government (2012). 11
  12. 12. POPULATION: NATURAL CHANGE AND NET MIGRATION Natural Change and Net Migration, 1951-2011 50 Persons (000s) 40 Natural change (births - deaths) 30 Net Migration 20 10 0 -10 -20 -30 -40 -50 1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2010 YearSource: General Register Office for Scotland (2012). Mid-2011 Population Estimates Scotland, May 2012. 12
  13. 13. POPULATION: NATURAL CHANGE AND NET MIGRATION Natural Change and Net Migration, 1951-2011 50 Persons (000s) 40 Total Fertility Rate Natural change (births - deaths) 2001 1.49 30 2002 1.48 Net Migration 2003 1.54 20 2004 1.60 2005 1.62 10 2006 1.67 0 2007 1.73 2008 1.80 -10 2009 1.77 2010 1.75 -20 -30 -40 -50 1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2010 YearSource: General Register Office for Scotland (2012). Mid-2011 Population Estimates Scotland, May 2012. 13
  14. 14. PROJECTED PERCENTAGE POPULATION CHANGEIN SELECTED EUROPEAN COUNTRIES 2010 - 2035 Projected percentage population change in selected European countries, 2010-203535% Percentage change30%25%20% Scotland15% +10.2%10% 5% 0% -5%-10%-15%-20% Norway Switzerland Germany Hungary Cyprus Czech Republic Sweden Romania Denmark Italy United Kingdom Malta EU27 Finland France Luxembourg Northern Ireland Belgium Netherlands Lithuania Portugal Slovenia Bulgaria Estonia Poland Iceland England Ireland Latvia Slovakia Greece Scotland Spain Austria Liechtenstein WalesSource: General Register Office for Scotland. (2012). 14
  15. 15. GDP PER HOUR WORKED (INDEX: USA = 100) 2010 GDP per hour worked (USA=100) 2010 GDP per hour worked 140.0 (USA=100) 120.0 100.0 80.0 60.0 40.0 20.0 0.0 Hungary Canada Norway Switzerland Netherlands Japan Finland Australia Slovenia Slovak Turkey Germany Denmark Luxembourg Portugal New United Austria Spain France Czech Poland Mexico Sweden Scotland Belgium UK Italy Ireland Korea Iceland Greece Top Quartile Second Quartile Third Quartile Bottom Quartile CountrySource: Scottish Government (February 2012). 15
  16. 16. Korea Finland 536 Canada New Zealand PISA Score Japan Australia Netherlands Belgium Source: Scottish Government (February 2011). Norway 503 Estonia Switzerland Iceland 500 Poland United States *PISA: Programme for International Student Assessment Scotland 500 N Ireland Germany Sweden 497 France Ireland Country Denmark 496 495 EDUCATION AND SKILLS IN SCOTLAND England Hungary UK OECD average Portugal 489 Italy Greece Slovenia Spain PISA* Education and Skills in Scotland 2009 - Reading Czech Rep Slovak Rep Wales Israel Luxembourg Austria 472 470 Turkey Chile Mexico16
  17. 17. Korea Finland 541 Switzerland Japan PISA Score Canada Netherlands New Zealand Source: Scottish Government (February 2011). Belgium Australia Germany Estonia Iceland *PISA: Programme for International Student Assessment Denmark 507 503 Slovenia Scotland Norway 499 498 Slovak Rep France Countries Austria 496 EDUCATION AND SKILLS IN SCOTLAND OECD average Poland Sweden 494 England Czech Rep UK N Ireland Hungary PISA* Education and Skills in Scotland 2009 - Mathematics Luxembourg Ireland Portugal 489 487 487 United States Spain Italy Wales17
  18. 18. Finland 554 Japan Korea New Zealand Canada Estonia PISA Score Australia Netherlands Source: Scottish Government (February 2011). Germany Switzerland England UK Scotland 514 Slovenia *PISA: Programme for International Student Assessment N Ireland Ireland 508 Poland Belgium Hungary United States OECD average Countries EDUCATION AND SKILLS IN SCOTLAND Czech Rep Norway Denmark 500 499 France Iceland 496 Wales Sweden Austria Portugal 495 494 493 PISA* Education and Skills in Scotland 2009 - Science Slovak Rep Italy Spain Luxembourg 484 Greece Israel Turkey Chile Mexico18
  19. 19. 0 10 20 30 40 50 60 Canada % Israel Japan New Zealand United States Finland 36 Australia Norway 36 Estonia United Kingdom Korea Ireland Scotland (25-64 AGE GROUP) 2009 Source: OECD (2012). Education at a Glance 2011. Scottish Government (2012). Denmark 35 35 34 Sweden 33 Belgium Netherlands Switzerland Iceland OECD Country Luxembourg 32 32 Spain France Germany Chile Greece Slovenia GRADUATES AS A PROPORTION OF POPULATION Poland Graduates as proportion of Population (25-64 age group), 2009 Austria 19 Hungary Czech Republic Mexico Slovak Republic Italy Portugal 13 Turkey19
  20. 20. UNIVERSITY SPIN OUT COMPANIES PER MILLION POPULATION 2001-02 TO 2006-07Source: Scottish Government (2009). Scottish Economic Statistics 2008. 20
  21. 21. BUSINESS R & D EXPENDITURE AS % OF GDP as % of GDP 2001-2010 % 2.7 2.5 2.5 1.9 1.8 1.5 1.4 1.1 0.5 Sweden* Finland Japan** USA** Germany OECD** France UK Scotland * 2001 and 2003-2010, **2001-2009Source: Scottish Government (May 2012). 21
  22. 22. BUSINESS DENSITY Scotland 267th from 349 European regions/countries Number of businesses per 1,000 population 75.6 67.3 61.2 57.1 43.4 26.5 11.5 Catalonia Sweden Finland Norway Denmark Scotland Germany Country/AreaSource: Eurostat. (2011). Data for 2008 22
  23. 23. NATIONAL 2011 TOTAL ENTREPRENEURIAL ACTIVITY (TEA) ACTIVITYRATES FOR 23 SOVEREIGN INNOVATION DRIVEN NATIONS AND SCOTLAND Percentage of adult population between 18-64 yearsSource: Levie, J. Global Entrepreneurship Monitor 2011. (2012). 23
  24. 24. THE GLOBAL ENTREPRENEURSHIP INDEX AND GDP PER HEAD PPP HIGH GLOBAL ENTREPRENEURSHIP INDEX Ξ HIGH GDP PER HEAD (43 countries, approx. 2,000 samples per country) High LowSource: Bonsa, N. et al. (2009). Global Entrepreneurship Monitor, 2008 Executive Report. 24
  25. 25. ESTABLISHED BUSINESS OWNER/MANAGER RATIO(Proportion of owner/managers of businesses more that 3½ years old in the working age population) Small European Countries, Scotland, UK 8.7 2000-07 % 8.1 7.7 6.3 5.4 5.3 4.6 Finland Iceland Ireland Norway UK Denmark Scotland CountrySource: Levie, J. (2009). Enterprise in Scotland: Insights from Global Entrepreneurship Monitor. (2009). 25
  26. 26. ESTABLISHED BUSINESS/OWNER RATES AND TEA RATES FOR SCOTLAND, UK AND SMALL DEVELOPED COUNTRIES * *established business owner/manager rateSource: Scottish Enterprise Research Team (2009). 26
  27. 27. THE ENTREPRENEURIAL EFFECT? “A cut in the corporate tax rate by 10 percentage points will raise the annual growth rate by one to two percentage points” (1970-1997, 70 countries).Source: Lee and Gordon (2005). Tax structure and economic growth. Journal of Public Economics 89 1027-1043. 27
  28. 28. HIGH GROWTH FIRMS IN SCOTLAND ~ 1,500 in Scotland  Create around 50% of all new private sector jobs*  Account for around 40% of economic growth over 3 years  Are highly productive, disproportionately innovative  Are highly internationalised  Occur across all sectors not just “key” * In firms with 10+ employees 28
  29. 29. BUSINESS ANGEL INVESTMENT ACTIVITY 2007-2011 70 £m 60 50 Non-disclosed angel* 40 30 Public sector finance 20 Other private investment 10 Linc members 0 2007 2008 2009 2010 2011 Year *estimatedSource: Linc Scotland (2012). 29
  30. 30. STRENGTH IN SCIENCE BASE Citations per million GDP (rebased) Scotland Denmark Finland Belgium GB Germany France ChinaSource: Evidence Ltd, 2009. International comparative performance of Scotland‟s research base November 2009. 30
  31. 31. STRENGTH IN ENERGY GVA £21.9bn (2008); GVA annual growth rate 15.6% (1998-2008) Conventional Power Generation Renewables  Original Equipment Manufacturers  Ambitious targets:  Design and engineering companies  31% of electricity consumption by 2011  Consulting engineers  100% by 2020  Strengths in „clean coal‟  20% of total energy use by 2020  Of total European resources: 25% of wind 25% of tidal 10% of waveSource: Scottish Enterprise (2011). 31
  32. 32. BEATRICE 1 TURBINESource: Scottish Enterprise (2011). 32
  33. 33. OYSTER MARINESource: Scottish Enterprise (2011). 33
  34. 34. OYSTER 800 WAVE POWERSource: http://www.aquamarinepower.com/technology/how-oyster-wave-power-works/
  35. 35. OYSRER 800 IN ACTIONSource: http://www.aquamarinepower.com/technology/how-oyster-wave-power-works/
  36. 36. STRENGTH IN LIFE SCIENCES Scotland – in top 5 world locations for life sciences Gross Value Added (GVA) £1.4bn GVA per Employee £61k GVA Annual Average Growth Rate (1998 -2008) 5.4% No. of Companies 444Source: Scottish Enterprise (2011). Data for 2008. 36
  37. 37. NORTH SEA REVENUES (£BN) 12.9 £bn 12.3 11.2 9.4 8.8 8.9 8.8 7.9 7.5 6.4 6.5 5.4 5.2 5.1 4.7 4.7 4.5 4.3 3.9 3.3 3.4 3.3 2.5 2.3 2.3 2.5 2.6 1.7 1.3 1.3 1.0 80/81 81/82 82/83 83/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 10/11 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 YearSource: Scottish Government (2012). GERS 2010-2011. 37
  38. 38. SHARE OF HIGH-GROWTH FIRMS IN SELECTED OECD COUNTRIES 2005 EMPLOYEE BASED MEASURE % of all firms with 10 or more employees Romania Finland Denmark Italy Canada Netherlands Luxembourg Spain New Zealand Hungary Czech Republic United States Latvia United Kingdom Scotland 6.3 Bulgaria LithuaniaSource: NESTA (2009). Measuring Business Growth. High Growth firms and their contribution to employment in the UK. 38
  39. 39. SCOTLAND – REASONS TO ROAR?  Population increasing  Energy – Scotland has 25% of Europe‟s renewable resource in  tidal  wind and 10% of wave  Oil and gas  Food and drink  Life sciences – growing. 39
  40. 40. SCOTLAND – CELTIC LION OR TIM’ROUS BEASTIE?  Immigration  More business  Business R&D  Business training & ambition  Risk capital  Fiscal devolution/autonomy. 40
  41. 41. SCOTLAND: CELTIC LION OR TIM’ROUS BEASTIE?Donald JR MacRaeLloyds Banking Group ScotlandUNIVERSITY OF EDINBURGH17th September 2012

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