October 22nd, 2015.
The State of Business in … Scotland
They’re recently had the referendum and chose to stay a part of the UK, which drew in promises of greater support from parliament. It’s soon approaching a year ago since the Scottish Referendum, so how has this decision affected Scottish industries and is there any impact on Scotland’s economics? Let’s take a look.
Growth in Scottish Business
Business has been booming in bonny Scotland, with the economy seeing its longest period of uninterrupted growth since 2001. This is excellent news for both domestic and foreign companies based in Scotland, made only better by continued predicted growth by experts.
However, it is unlikely that there will be further economic growth from the public sector within Scotland as many of the major public projects have finished or are near completion. That said, there does appear to be plenty of scope for private businesses – especially domestic and commercial builders – to take off.
Politics of Economics
Following the referendum, there were several key powers which were given to Scottish Parliament, including:
• Setting income tax rates and bands
• Controlling a proportion of VAT raised in Scotland
• Managing the assets of the Crown Estate
All of these powers can be used to help Scottish businesses financially, both providing them with funds acquired through the VAT and allowing for lower tax rate to attract workers from around the UK. If used to the best of its ability, this could be an extremely influential tool for Scottish business although no major moves have been made to utilise this fully yet.
Changes to EU Operations
In a recent announcement, it was declared that Scotland could benefit from more jobs and even more business if changes are made to the EU operation. With the EU referendum taking place in 2017, a change to the EU may be critical to trade and investment.
With more than one in ten jobs in Scotland being dependant on trade with other EU nations, it is vitally important to Scotland that they remain within the EU. It is hoped that by encouraging an EU reform, it will bring more jobs into Scotland by expanding the single market in services and signing trade deals.
Exports and Tourism
One area that Scottish businesses seem to be doing exceedingly well at is exporting goods. In the last year, manufacturing export volumes have increased by 2.7% in real terms with items like whisky, oil and smoked salmon being the big ticket items.
While exports have always been a strong point for Scotland, their tourism industry has seen a hike of 13% in spending by overseas visitors. It is argued that the publicity from the referendum made people more aware of Scotland and lured in far more visitors than ever before. This in turn has seen far more spending in local businesses and allowed Scotland to offset the impact of rising import costs.
Highest Productivity, Most Foreign Investment
Apart from London, Scotland receives the most foreign investment of anywhere within the UK. While a large part of this is due to the international oil trade, a large part of it is thanks to the country’s high productively rate which is the best outside of London and the south-east.
A large majority of the foreign direct investment is placed in knowledge-intensive industries, like financial services. Despite Edinburgh being Europe’s fourth-largest financial centre, the revenue created through this stream only contributes to around one-tenth of Scottish GDP.
Are you planning to invest in Scotland? Talk to Pure Commercial Finance today to find out what we can do to find the perfect finance package for your needs.