Productivity Briefing Note – commissioned by SCDI for use as input to their recent report ”From Fragile to Agile: A Blueprint for Growth & Prosperity’
Productivity, and its rate of growth, is a key measure of economic success. It is best measured in terms of labour productivity per hour.
Within the overall measure, multi-factor productivity (MFP) is a key element as it picks up the role of innovation and new practices in improving output.
Many ‘advanced’ economies have been worried about a slowing in underlying productivity in recent decades. This concern has been exacerbated post 2007 as productivity has fallen or stood still.
Brief Analysis of latest Quarterly National Accounts Scotland (2015 Q3) statistics
The bad news over the Scottish economy continues with the latest publication of Scottish National Accounts figures.
Excluding offshore (North Sea) activity, cash terms Scottish GDP grew in Quarter 3 (+0.6%) after a couple of quarters of falls. However, including (a geographical share of) the offshore sector resulted in a fall (-0.8%) in overall Scottish GDP in Q3.
This latest fall means that Scottish GDP per head of population (including the North Sea) is now 1% lower than that of the UK as a whole. Only two years ago this figure was 6% in Scotland’s favour and in 2008 it was over 15% in Scotland’s favour. (Note: Using GDP per capita gives an exaggerated picture of Scotland’s relative decline, due to ownership issues, and the use of Gross National Income would be a better measure, but is currently not available for Scotland.)
Scotland’s (onshore) Net Trade position in Quarter 3 was -£4.25 billion, the highest deficit on record. Scotland looks to be on course for a deficit of over £15 billion in 2015, well above the previous record annual deficit level seen in 2008, of just under £12 billion, and around £6 billion worse than was seen in 2013.
This rising deficit is due in large part to a deteriorating trade position with regards to the Rest of the UK, which has worsened by £1.5 billion in the last 3 quarters alone, with exports down and imports up, both by around £750 million.