'This should not be happening'
CBI chief attacks Scots exports, education and R&D
CBI president Paul Drechsler will today raise concerns over Scotland’s weak exports, falling education standards and under-investment in research and development.
Mr Drechsler will urge Scottish firms to pursue exporting with greater vigour, noting that just 70 companies are responsible for half of Scotland’s sales outside its borders.
He will call for improvements in education, innovation and infrastructure to enhance productivity across Scotland to help push up living standards.
Speaking at the CBI Scotland annual lunch, he will also call for the UK to maintain a “deep relationship” with the single market and a customs union “unless or until an alternative is ready and workable.”
He will warn that losing access to the single market could wipe 30% off Britain’s trade.
Addressing 200 members at the Principal Hotel in Edinburgh, he will encourage more Scottish firms to export, adding that retaining a link to the EU is vital for both Scotland and the UK.
“What we shouldn’t do is turn our back on our closest trading partners – that means the UK, and it means the EU.
“Scotland’s exports are worth £79 billion – £50bn of that goes to the rest of the UK. And with exports worth over £12bn, the EU remains Scotland’s largest global trading partner.”
Mr Drechsler will argue that success in the EU talks means “frictionless trade” with the EU, regulatory certainty and increased trade with the rest of the world.
“Business needs the three D’s on Brexit – that’s decisions, detail and delivery.”
Stressing the importance of EU trade to the UK economy he will note that 48% of UK export goods go to the EU and 78% of UK exporters sell into the bloc.
“Protecting that trade has to be our number one priority. Even if we signed Free Trade Agreements with the USA, Canada, Australia and New Zealand tomorrow, it would account for less than 3% of our total trade in goods and services.
“To do the same with Brazil, Russia, India and China would achieve even less – just 2%.
“The evidence says we can do both – trade with the EU and with the rest of the world. Germany already does 4.7 times more trade with China than we do, without a free trade deal and from within a customs union.
“We don’t need to cast aside established EU partners for potential riches beyond. What we do need is a better solution, one that fulfils the Government’s own objectives of frictionless trade and no Irish border.”
He will say that there is plenty that can be done to improve trade – direct flights, trade missions and improving export finance.
“Whereas if we lose access to the single market, it could reduce UK trade by up to 30%.
“All the evidence suggests that being in some form of customs union with the EU, alongside a deep relationship with the single market and an open approach to migration is the best thing for business.”
Referring to Scotland’s education and skills agenda, Mr Drechsler will say that “nowhere else has so many world class universities in such close proximity,” while adding a warning.
“There’s now a question mark hanging over Scottish education. Universities are telling us they’re starting to struggle to attract overseas talent. And schools are falling down the league tables for maths, reading and science.
“This should not be happening. With spending per pupil among the highest in the world, Scotland should be producing a workforce that can rival anywhere on earth.”
On innovation he will acknowledge that “Scotland has a great innovation ecosystem. It has the potential to become world-class.
“But it could just as easily fall behind. Scotland spent just 1.45% of GDP on R&D in 2015, less than the rest of the UK.
“The CBI has campaigned to increase that target, but even with that in place, more needs to be done.
“Scotland’s universities are a cracking example of what Scottish education can achieve. Let’s make them as good as they can be.
“Schools, innovation, and immigration – on all these crucial questions, let’s make sure we’re giving the right answers.”
Similarly, he will call for “a vision of what the next generation of infrastructure looks like”, noting the investment in the Queensferry Crossing.
“Nine in ten firms see digital networks as crucial to securing investment.
“That’s why we support the Scottish government’s plan to make superfast broadband universal by 2021. Ambitious, yes – but absolutely necessary, because connectivity isn’t just about computer speeds, it’s fundamental to how people live their lives and how people run their businesses.”