Collaboration on skills and move away from oil and gas are key for future
Investment nerves are hitting Scotland’s economy, which is on course for sub-par growth.
Accountancy group EY’s new summer update for the region says GDP is forecast to reach 0.9% – compared to the UK’s 1.8 – but the report says more collaboration on skills can provide light at the end of the tunnel and combat an over-reliance on oil and gas.
With Scotland’s economy showing signs of slowing faster than the rest of the UK - half the UK’s expected growth for the same period - the report says buoyant consumer spending is fading and businesses remain reluctant to invest because of uncertainties around Brexit and what it will mean north of the border.
EY supports calls for business and government to work harder and smarter to achieve sustained growth, saying: “Stimulating business investment in Scotland both in terms of physical assets and skills could deliver extensive, long-term economic benefits. This presents an opportunity for public and private sectors to define a new way of working together in order to drive further economic growth.
“Business investment is imperative to the Scottish economy’s long-term health and growth, but is currently subdued. Government can help de-risk investment by supporting development of the skills and infrastructure businesses need so companies can feel confident of maximising their investment.
“A collaborative approach between public and private sectors will ensure projects, proposals and investments are prioritised to deliver the biggest return in terms of skills, jobs, economic benefits, productivity, innovation and competitiveness.”
One continuing factor for Scotland’s poor performance is seen as the ending of the outsized contribution to GDP growth from construction as many of the big ticket public sector funded infrastructure projects near completion – another signal that stronger growth will require higher levels of businesses investment.
The report says: “The economy needs to rebalance and shift away from a reliance on public-funded major infrastructure projects. Sector diversification is also needed to help move away from an over reliance on oil and gas, construction and financial services.”