Call for debate

Scotland ‘needs output of Google’ to match rivals

Tom Hunter’s report says Scotland ‘needs the output of Google’

Scotland needs to create the equivalent of a company with the output of Google in order to bridge the gap with rival small nations, according to a new report.

A study commissioned by entrepreneur Sir Tom Hunter’s foundation, says the country’s output lags way behind Denmark, Ireland, Norway and Singapore.

The study by Oxford Economics says radical and ambitious policy changes are required if Scotland’s economic performance is to be transformed and significantly boosted within the next 15 years.

Raising Scotland’s Economic Growth Rate, published today, is intended to spark a national debate that will help shape policy.

The aim is to address such issues as low productivity, poor business birth rate and lack of success with scale-ups that help to explain why Scotland’s GDP per head is a mere 44% of Singapore’s level, 48% of Ireland’s, 68% of Norway’s and 75% of Denmark’s.

The report finds that “it is not realistic to think that the current economic policies of either the UK or Scottish governments will produce a transformation of Scotland’s economic performance”. Indeed, nor will they for the UK as a whole. 

It puts the case for policies that go beyond current government boundaries, and considers various options under three headings:

 Increases in government borrowing to stimulate stronger growth in demand and output

Significant tax cuts and deregulation to improve competition and incentives in the economy

Large increases in government support for businesses, either directly or through increased spending on infrastructure, education and skills, innovation and the green economy.

It says these approaches are not mutually exclusive and, if there is to be radical change, there is a strong case for a combination of all three.

It argues that drastic change is required as Scotland’s economy lags behind some other countries to such an extent that it would need a business comparable in size with Google’s total global output to bring its GDP per head of population up the level of Norway’s. 

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Scotland’s GDP per head has been about 8% lower than the UK as a whole for many years, largely because of poorer productivity. Scotland’s business birth rate came ninth out of 12 UK nations and regions in 2019. The report forecasts that for the period from 2020 to 2035, Scottish real GDP growth will average just 1.3%. 

In terms of government support and intervention, the report recommends an ambitious industrial policy, possibly centred around Scotland’s renewables industry, tapping into its rich tidal, wave and wind resources.

This would capitalise on the COP26 UN Climate Change Conference scheduled for Glasgow in November and would support the Scottish government’s commitment to net zero carbon emissions. The report says “it is not implausible to suggest that there are business opportunities that resemble those that generated Silicon Valley, several decades ago”.

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