The State of Britain


In 2018 the highest annual growth of the 179 UK sub national areas was in Falkirk, Edinburgh’s GDP per head in the UK top 10 but Shetland declines and Highlands and Islands Enterprise sinks from 11th to 42nd in the UK rankings

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Following its first publication of quarterly GDP estimates for the regions in September, the ONS has now published its 2018 full year estimate of economic activity by UK country, region and local area using gross domestic product.

The figures showed the Scottish economy grew by 0.9% in 2018 down from growth of 1.6% in 2017. This placed Scotland ninth (2017 ranking also ninth) out of the twelve UK ‘regions.’

The UK and England growth rate in 2018 was 1.4%. Wales grew by 0.9% and Northern Ireland recorded negative growth of 0.5%.

Within Scotland, the Falkirk economy grew the fastest at 10.5%, followed by Edinburgh at 3.8% and the Western Isles at 3.7%. Across the UK, the highest annual growth of the 179 local areas was in Falkirk.

Eleven areas of the country saw their GDP decline in 2018. Shetland recorded a drop of 7.7% (the third worse in the UK), followed by Clackmannanshire and Fife at 3.8% and Perth and Kinross at 2.8%.

GDP per head growth of 10.3% to £33,868 was seen in Falkirk although at £51,224 Edinburgh was top. Indeed Edinburgh, at eighth place, was one of two areas outside of London and the South East to feature in the UK top 10. GDP per head fell by 7.4% in Shetland to £36,527 but East Ayrshire and North Ayrshire mainland was bottom in the country with £16,795.

In terms of UK extremes, GDP per head in Camden and the City of London was £395,309 with Ards and North Down at £15,034; East Ayrshire and North Ayrshire was the next lowest in the UK. These figures are a guide and are influenced by commuter flows.

In 2018, key drivers of the Scottish economy were information and communication up 7.5%, arts/entertainment up 5.4% and administrative support services up 4.8%. Those areas that did not perform well were agriculture down 1.4%, mining down 2.6% and electricity/gas services declined by 3.7%. Overall services grew by 1.6%, construction fell by 3.6% and production dropped by 1.0%.

The 2018 performance of Scotland’s two development agencies was also highlighted by the ONS. Of the UK’s 45 development bodies or economic regions, Greater Birmingham and Solihull LEP was ranked first in the UK with growth of 2.8%. Scottish Enterprise moved up the rankings from 29th to 23rd with growth of 1.1% but Highlands and Islands Enterprise sank from 11th to 42nd with negative grown of 0.8%. Tees Valley LEP was last (45th) with negative growth of 2.1%.

In terms of a more recent time period, data released by the Scottish Government in December showed the economy grew by 0.7% to September 2019. This compared with 1% growth in the UK overall.

This figure was poorer than the nowcast estimate from ESCoE in November. Part of the gap is explained by slightly different methods of calculation used by the Scottish Government and by the ONS but not all of it.

Increased electricity output and finance/business services helped grow GDP by 0.2% each. Overall, construction was flat, services grew by 0.2% and production was up by 0.9%. Poor performers were the retail/wholesale and accommodation/food services sectors which contracted.

Unemployment in Scotland dropped by 9,000 to 100,000 between August and October 2019; the drop of 0.3% took the overall rate to 3.7%. The UK rate is 3.8%. The highest rate was 6.1% which was recorded in the North East.

The South West had the highest employment rate at 80.8% which compared with 74.5% in Scotland. The UK rate was 76.2%.

Scottish average property prices fell by 0.9% during October 2019 which took prices to £153,692, an annual increase of 1.4%. In comparison, UK prices fell by 0.7% to £232,944, an annual growth rate of 0.7%.

Over the summer Scotland’s economy moves up to fourth in the UK rankings, some concerns over the unemployment rate, and consultation on the replacement for EU structural funds begins

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The UK government has promised to replace EU funding to the regions with a new UK Shared Prosperity Fund. EU structural funds (regional development and social funds) have recycled £740m into Scottish projects between 2014-20.

Last month the Scottish Government launched a consultation on how these funds should be replaced after Brexit.

To complicate the issue, the EU has proposed that ‘transition region’ status should be extended to cover all regions with a GDP per head between 75-100 per cent of the EU average, compared to 75-90 per cent at present.

Seven additional UK sub-regions are likely to slip below the threshold of 100% EU average GDP per head, qualifying them for ‘transition region’ status. South West Scotland falls into this new category.

It is not clear how much extra funding South West Scotland would have received from the EU, but €50 per head over the next EU spending round is not an unreasonable assumption.

In Dundee, the Michelin site has received a £60m funding commitment to turn the former plant into an innovation centre focusing on sustainable mobility, clean transport and low carbon energy.

Last year the firm said that it would close the plant with the loss of all 845 jobs in 2020. More than 400 employees have found new jobs since Michelin announced the closure of the factory.

The £60m investment is supported by Michelin, Scottish Enterprise and Dundee City Council. It is not clear at this stage what the breakdown of the investment is or how much public money is involved.

On transport, figures released by Virgin Trains show more people travelling between London and Glasgow by rail rather than air. The record level was driven by a 6% year-on-year increase in the number of passengers travelling, c718,000, up from c244,000 a decade ago.

FirstGroup and Italian firm Trenitalia, are to take over the running of the route from December, replacing Virgin, which was barred from bidding. In the latest National Rail Passenger Survey, of the 25 operators in the country, Virgin was ranked second.

FirstGroup operates TransPennine Express, Virgin’s only competitor on most of the northern part of the West Coast mainline. The Competition and Markets Authority has raised concerns train ticket prices could rise under the new franchise.

The Authority said that on 21 routes, passengers would have little or no option but to choose a service run by FirstGroup. At Lockerbie, where there are no Scotrail services, passengers will have no choice. The Authority’s investigation into the new contract is ongoing.

The Stats

Following its first publication of quarterly GDP estimates for the regions in September, the ONS has now published its next estimates for the nine English regions and Wales, for the year to March 2019. GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013.

The Scottish figures are compiled by statisticians and economists in the Office of the Chief Economic Adviser of the Scottish Government.

The latest available comparable figures showed that Scotland’s economy grew by 1.4% compared with 1.5% in the year ended December 2018. This ranked the ‘region’ eighth (was previously seventh) out of the twelve UK ‘regions’.

London topped the table with growth of 4.2% with Yorkshire and The Humber bottom at -0.3%. Propelled by a drive to meet the original March 31st Brexit date, UK growth over the same period was 2.2%.

The ONS figures also showed that growth in Scotland accelerated in the quarter to March 2019. The economy grew by 0.5% in January to March 2019, following growth of 0.1% in October to December 2018.

In this period, food & drink and pharmaceutical & related industries accounted for more than half of the 0.5% growth.

Overall, output in the construction sector increased by 2.0%, output in the production sector increased by 1.8% and output in the services sector grew by 0.1%.

Estimates published by ESCoE last month for the year ended September 2019, a more recent period than the ONS figures, ranked Scotland fourth (previously sixth) with growth of 1.55%, which suggests the country has had a better summer relative to other parts of the UK.

Using this metric, UK growth was 1.45%. Growth in London (ranked first) was 2.32%, which compared with growth in the South West of England (bottom) at 0.41%

More data from the ONS showed that unemployment increased by 8,000 to 110,000 between July and September; the increase of 0.4% was the second highest in the UK and took the overall rate to 4.0%. Northern Ireland had the lowest rate of 2.5%, with the UK rate at 3.8%. The highest rate was 5.9% which was recorded in the North East.

The South West had the highest employment rate at 81.0% which compared with 74.4% in Scotland; the UK rate was 76.0%.

In September, average earnings in Scotland were up by £21 to £622 per week. London had the highest average earnings in the UK of £830. The lowest average earnings of £527 were recorded in Wales. In the UK overall, average earnings grew by 3.6% or by 1.8% after inflation.

Scotland’s average property price increased by 0.3% over the month to £155,029 which took the annual uplift to 2.4%. In comparison, UK prices fell by 0.2% to £234,370 during September, an annual growth rate of 1.3%.

Largely negative economic data and a slew of job losses, the North Coast 500 shows which economic road to take

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Data released by the Scottish government showed GDP contracted by 0.2% over Q2 instead of the initial 0.3% estimate. Compared to the same quarter last year, Scotland’s GDP has grown by 0.6%, revised down from the first estimate of 0.7%. 

This differed from the nowcast estimates from ESCoE last month which had growth in Scotland at 1.4%. Part of the gap is explained by different methods of calculation used by the Scottish government and by the ONS but not all of it.

The construction sector fell by 2.4%, the production sector fell by 1.5%, while the services sector grew by 0.2%.

Unemployment in Scotland increased by 20,000 to 112,000 between June and August, the increase of 0.8% was by some way the biggest jump in the UK and took the overall rate to 4.1%.

The South West of England continued to record the lowest rate at 2.4% with the UK rate at 3.9%. The highest rate was 5.8% which was recorded in the North East of England.

The South West also had the highest employment rate at 81.0% which compared with 74.3% in Scotland. UK employment was estimated at 75.9%.

Scottish average property prices increased by 0.3% to £154,549, which took annual growth to 1.6%. In comparison, UK prices grew by 0.8% to £234,853 during August, an annual growth rate of 1.3%.

Analysis by the BBC has found workers living in coastal communities in Great Britain earn on average £1,600 less per year than those living inland. There was no surprise that since 2010 wages fell by c20% in real terms in Aberdeen South.

Argyle & Bute and the Western Isles were also in the top ten biggest fallers in the UK. In seaside towns median wages were £22,104 compared with £23,785 in non-coastal areas.

The ONS’s Personal Well-being (or Happiness) Index has ranked Scotland last out of the 12 UK ‘regions’ in terms of improved happiness since the last survey. Overall though, the Northern Irish were still the happiest in the UK with Londoners still the most miserable.


It has been revealed that the Scottish government’s own adviser was against the nationalisation of Ferguson shipyard. The yard’s administrators have now gained approval from creditors to hand it over to taxpayers via the Scottish government.

New figures from the administrator show £49.7m has already been deployed from the public purse to keep the business afloat.

Single malt Scotch whisky exported to the United States now has a tariff of 25%. The new duty is one of the measures being imposed by the US in retaliation against EU subsidies given to aircraft maker Airbus.

Scotch exports to the US last year were worth £1bn with single malts accounting for a large share of that.

Sometimes huge sums are not needed to further economic development. The North Coast 500 generated £22.8m for the north Highlands’ economy last year and created 180 new jobs, according to research by Glasgow Caledonian University’s Moffat Centre for Tourism.

The 516 mile-long touring route takes in a network of roads around the region’s north, east and west coasts.

Room occupancy throughout the north Highlands went up from 52% in 2014 to 78% in 2018. There was also a 19.9% increase in visitors to free admission attractions and paid admission attractions went up by 41.7%. Full marks to the North Highland Tourism Initiative.


Scotland’s unemployment figures could get worse, after a slew of job losses this month.

Korean wind turbine maker CS Wind said over 70 jobs could be lost at its Campbeltown factory in Argyll. The company cited reductions in support for renewable energy, as well as a failure to secure major project work as reasons why.

Perthshire ventilation system company MJ Ventilation has gone into liquidation with the loss of all 81 jobs. The Coupar Angus firm had solvency problems compounded by bad debts from the insolvencies of Carillion and McGill Electrical.

Then in Bellshill, sausage-skin maker Devro announced its intention to close its factory with the loss of 90 jobs. The firm said it intends to increase manufacturing at its other North Lanarkshire site in Moodiesburn, which recently received a £2m investment.

In Glasgow, more than 200 people have lost their jobs after retailer Watt Brothers went into administration. Eleven shops were closed and 229 of its 306 employees were made redundant with immediate effect.

Oil services firm Aker Solutions, which has a base at Aberdeen International Business Park, has consolidated its international engineering services and manufacturing work impacting its facility in the city. About 95 jobs are at risk.

Sixty workers at a the BiFab fabrication yard at Arnish in Lewis will not have their contracts renewed. The yard was mothballed for about a year then it was reopened in March of this year to manufacture parts for an offshore wind farm.

BiFab also has yards in Methil and Burntisland in Fife and has previously received help from the Scottish government to avoid the threat of administration. Last month, the Auditor General for Scotland said a taxpayer loan of £37m to BiFab is now valued at £2m.

Cummins which specialises in the distribution of engines and generators for various industries has announced it intends to close its operations in Cumbernauld. The company blamed increasingly challenging global economic conditions and said the facility requires a £3m investment. About 130 jobs are at risk.

A rare bright spot this month was supermarket chain Lidl, which officially opened its new £70m Scottish distribution centre in North Lanarkshire.

The 58,500 sqm warehouse is Lidl’s largest in Great Britain and will service the company’s 99 stores in Scotland. About 600 employees have relocated from Livingston to the Eurocentral-based centre and there is scope for a further 250 new jobs.


The air link between Dundee City Airport and London Stansted will continue into 2020. The UK and Scottish governments and Dundee City Council have agreed a public service obligation contract.

The service will run 11 flights every week, with the size of the planes on the route increasing from 33 to 48 seats. It is not clear how much public money is involved. The subsidy required for the initial two year period was c£3.7m

A ‘Tony Benn’ approach to industrial policy, a ‘Boris Bridge’ to Ireland and the jump in unemployment the highest in the UK

Reading Time: 4 minutesThe Scottish government’s fondness for 1970s ‘Tony Benn’ style interventions has been exposed by the Auditor General for Scotland in her 2018/19 audit of the Scottish Government’s accounts. Taxpayers have had to write off nearly £140m in loans and guarantees largely to private companies. They include a £45m loan to the Ferguson shipyard on the Clyde, a £21m guarantee repayment fee from Liberty Steel and a taxpayer loan of £37m to the BiFab fabrication company, which is now valued at £2m. Additionally loans of £33m to keep Prestwick Airport afloat are now worthless. The auditor general Caroline Gardner also criticised budgeting at Holyrood, saying there was a lack of detail in the budget plans set out by Scottish ministers, who are taking ‘a step backwards’ with the amount of information they are making available in terms of financial reporting.

The design and build of a new generation of Royal Navy frigates has been won by engineering firm Babcock. The £1.25bn contract for the five Type 31s secures hundreds of jobs at Rosyth in Fife. At £250m, the Type 31 ‘Lidl’ warship is a smaller, cheaper frigate than the Type 26 warships currently being built on the Clyde which are c£1bn each. The winning consortium also includes Thales and BMT, as well as Ferguson Marine, based in Port Glasgow, and Harland and Wolff in Belfast – both of which are currently in administration. The ships will be assembled in Rosyth, with construction work expected to be spread between the other yards across the UK. Work is to begin by the end of 2019, with the first ships delivered in 2023.

Channel 4 News has seen documents showing that the Treasury and Department for Transport have been asked for advice on the possible costs and risks of building a bridge from Scotland to Northern Ireland. Better infrastructure in Galloway suggests a bridge from Portpatrick to Larne is preferable to the shorter Campbeltown to the Antrim coast crossing. At 20 miles long though, the Galloway option would cost much more, c£15-£20bn, but the region does have an existing trunk roads network from the Cairnryan ports to the motorway network. Another complication is the Beaufort’s Dyke, a deep trench where millions of tonnes of ordnance has been jettisoned. Where or who will foot the bill for this project is unclear. Last month, Transport Secretary, Grant Shapps, put the £80bn HS2 project under review. Every Prime Minster wants a lasting legacy.

The Scottish Leather Group, one of the largest leather manufacturers in the UK, will open a new factory in Renfrewshire next year. The new facility will be operational in Paisley by autumn 2020 and will provide high-end car seat upholstery, creating 100 jobs. The firm already has facilities in Bridge of Weir, Paisley and Glasgow.

In Aberdeen, the Arjowiggins Stoneywood paper mill has been sold. In March, administrators said negotiations had ended without a sale, threatening 450 jobs in Aberdeen and over a hundred jobs in the South East of England. The deal has been supported with £7m of funding from Scottish Enterprise. Also in the city, dairy firm Muller will close its distribution, garage, tanker and retail operations blaming the declining consumption of fresh milk. Headcount is 45 but 22 new jobs will be created in central Scotland offering some employees the chance to relocate.

The Clydesdale and Yorkshire Bank is to close its Edinburgh operating centre. The group, which is due to complete its integration with Virgin Money shortly, currently has a headcount of about 9,500 of which c1,500 jobs will go by the end of 2021. Jobs will disappear from the brand and marketing and retail distribution divisions. Virgin Money’s St Andrew Square office in Edinburgh is expected to close by the end of this year with most of the 100 staff relocated to another site in the city. Overall, most of the 330 jobs from the Edinburgh, Leeds and Norwich operations will be redeployed, although there will be some redundancies.

Serco NorthLink has been named as the preferred bidder to continue Northern Isles ferry services. As part of the £345m contract, islanders will get a 20% discount on cabin fares on the Aberdeen-Kirkwall-Lerwick routes from January. There will also be a three-year fares freeze for passengers, non-commercial vehicles and on cabins. Scottish Ministers will retain control of fares and timetables.

Still with Serco, new trains will be introduced on the Caledonian Sleeper’s Highlands services next month, a year late. New trains on the Fort William, Inverness and Aberdeen to London routes were expected first in June, then September, and now mid-October.

The Stats
For the first time, the ONS has published quarterly GDP for the nine English regions plus Wales. GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013. The Scottish figures are compiled by statisticians and economists in the Office of the Chief Economic Adviser of the Scottish Government. The latest available comparable figures, which are for the year ended 2018, showed Scotland’s economy grew by 1.5%. This ranked the ‘region’ seventh of the twelve UK ‘regions.’ The East Midlands topped the table with growth of 3.4% whilst at the bottom the South West economy declined by 1.1%. UK growth over the same period was 1.5%.

The quarter to Dec 2018 showed the construction sector grew by 0.8% and the services sector grew by 0.5% but the production sector decreased by 0.9% largely due to electricity and the reactors at the Hunterston B station being offline. More recent estimates (six months later) for the year ended June 2019, published by ESCoE last month, ranked Scotland sixth with growth of 1.4%, which suggests Scotland’s economy has marginally strengthened this year relative to other parts of the UK.

More data from the ONS showed unemployment in Scotland increased by 19,000 to 110,000 between May and July, the uplift of 0.7%, which was the highest in the UK, took the overall rate to 4.0%. The South West had the lowest rate at 2.4% with the UK rate at 3.8%. The highest rate was 5.0% which was recorded in the North East. The South West also had the highest employment rate at 80.8% which compared with 74.9% in Scotland. UK employment was estimated at 76.1%.

Scotland’s average property price increased by 0.7% to £153.968, which meant annually prices had risen by 1.4%. In comparison, UK prices grew by 0.5% to £232,710 during July, an annual growth rate of 0.7%.

An improvement in Scotland’s finances but the deficit still 7% of GDP and 1970s style interventions on the Clyde

Reading Time: 4 minutesGrowth in Scotland was 1.4% in the year to June 2019, which ranked the country sixth (out of twelve UK ‘regions’) according to estimates from ESCoE. The slight drop from the previous quarter’s growth of 1.5% suggests the economy is contracting. London had the best performance nationally at 2.3% with Northern Ireland at 1% the worst. The national growth rate for the same period was 1.5%. With the UK economy contracting by 0.2% in the quarter, falling growth in Scotland reflects this and is similar to other regional economies which have also shrunk.

Unemployment in Scotland increased by 12,000 to 102,000 between April and June, an uplift of 0.4% to 3.6%. The South West had the lowest unemployment rate at 2.7%, the North East had the highest at 5.3%, with the UK rate at 3.9%. The South West also had the highest employment rate at 80.5%, which compared with Scotland’s at 75.4%; the UK rate at 76.1% is the joint highest since comparative records began in 1971.

In June, Scotland’s average earnings increased from £586 to £601 per week. London had the highest average earnings of £831; the North East had the lowest at £537. In the UK average earnings grew by 3.7% or by 1.8% after inflation.

Scotland’s average property price increased during the month, the 0.7% rise to £151,891 meant annually prices increased by 1.3%. In comparison, UK prices grew by 0.7% to £230,292 during June which left the annual growth rate unchanged at 0.9%.

Scotland’s public spending deficit has fallen by a further £1.2bn over the past year, according to Scottish government statistics. The Government Expenditure and Revenue Scotland (‘Gers’) estimated the country spent £12.6bn more on public services than it raised in taxes. This is lower than the £13.8bn deficit estimated for the previous year, and is equivalent to 7% of Scotland’s GDP. The UK as a whole has a deficit of £23.5bn – or 1.1% of its GDP.

FirstGroup and Italian firm Trenitalia, are to take over the running of the West Coast Mainline (‘WCM’) train route, connecting Scotland to London, from December, replacing Virgin Trains, which was barred from bidding. The new contract will operate in two phases. The first will run from 8 December to March 2026, when First Trenitalia will operate the existing InterCity West Coast services. The second phase will run from March 2026 to March 2031, when it will operate the HS2 high-speed rail service. Given the HS2 project has been put under review, this may have to be changed even before First Trenitalia starts operating the trains. The firm said its £117m investment would mean 56 Pendolino trains refurbished, more reliable free Wi-Fi, better catering, and more than 260 extra services each week by 2022. FirstGroup also operates the South Western Railway and TransPennine Express. TransPennine Express is Virgin’s only competitor on most of the northern part of the West Coast mainline. Virgin’s WCM partner, Stagecoach – which refused to take on pensions risk – has won the right to a judicial review of the decision to block it from bidding. Unlike other franchises, Virgin is consistently rated highly by Scots travellers. In the latest National Rail Passenger Survey, of the 25 operators in the country, it was ranked second.

The Scottish Government’s fondness for 1970s style interventions has continued. The Ferguson shipyard in Port Glasgow – which employs 300 people – has been nationalised and Ministers will now operate the yard under a management agreement with administrators Deloitte. The status of two taxpayer loans to Ferguson Marine, totalling £45m, is unclear, as are the EU state aid implications of a Government building ships with public funds. Bought by industrialist Jim McColl in 2014 just prior to the independence vote, the yard’s demise has been largely caused by a £97m deal for two CalMac ferries which are behind schedule and about £40m over budget.

An earlier intervention into the renewable energy sector has continued to unravel. The Scottish government loaned BiFab £19m then converted this into shares as losses mounted. Audit Scotland has ruled this equity stake is now only worth £6m. BiFab, an engineering firm, builds large-scale equipment for the offshore oil and gas industry, as well as platforms for offshore wind turbines and tidal generators. Since 2013, Scottish Ministers have also been in the airports business. Taxpayers are unlikely to recover any of the £38.4m they have shelled out to keep Prestwick airport afloat.

A report by an All-Party Parliamentary Group (‘APPG’) of MPs which looks at Post-Brexit Funding for the nations and regions has found that the UK would receive additional EU funding in the 2021-27 spending round. Three additional sub-regions, Lincolnshire, South Yorkshire and Tees Valley & Durham are likely to slip below the threshold of 75% EU average GDP per head that would qualify them for ‘less developed region’ status, but no part of Scotland has yet fallen below this level.

Additionally, the EU has proposed that ‘transition region’ status should be extended to cover all regions with a GDP per head between 75-100 per cent of the EU average, compared to 75-90 per cent at present. Seven additional sub-regions are likely to slip below the threshold of 100% EU average GDP per head, qualifying them for ‘transition region’ status. South Western Scotland falls into this category, as well as East Wales, East Anglia, Greater Manchester, Leicestershire, Rutland & Northamptonshire, Outer London South and North Yorkshire. It is not clear how much extra funding these areas would have received from the EU, but €50 per head over the next EU spending round would equate to £560m.

The UK government has promised to replace EU funding to the regions with a new UK Shared Prosperity Fund. If the new sub regions are added, the APPG calculates this amounts to c£1.8bn pa, on top of the c£2.2bn pa already committed as part of Local Growth Funds (in England). Integrating the Local Growth Fund into the UK Shared Prosperity Fund could be problematic. The Local Growth Fund allocates funding to LEPs via competitive bidding whereas the allocation of EU funds uses a fixed formula. How the Shared Prosperity Fund will be allocated to Scotland and the other devolved nations, and mesh with other pots like the City Deals is yet to be determined.

Go to businessman Lord Smith of Kelvin has been appointed chairman of Scotland’s main economic development agency, Scottish Enterprise. Lord Smith is one of Scotland’s most experienced boardroom bosses, with previous roles as chairman of Weir Group and SSE. He also led the Smith Commission into further devolution of more powers from Westminster to Holyrood, which culminated in the Scotland Act 2016. The agency has around 1,100 staff based in 14 offices across the UK and a further 33 overseas offices, and a c£250m budget.

Income tax receipts fall short of forecasts and more money for the Borderlands Growth Deal

Reading Time: 3 minutesUnemployment in Scotland was virtually unchanged at 92,000 between March and May, a rate of 3.3%. At 2.6% and 5.6% the SW of England and the North East had the lowest and highest unemployment rates in the country. The UK unemployment rate stands at 3.8%.

Scottish average property prices increased by 1.2% to £152,801 during the month which uplifted the annual growth rate to 2.8%. In comparison, UK prices increased by 0.1% to £229,431 during May which reduced the annual growth rate to 1.2%.

The amount of income tax revenue raised by the Scottish government in 2017/18 went up by 1.8% but this was £941m short of forecasts according to HMRC figures. It is the first time revenue from Scottish taxpayers has been calculated since the new devolved powers over income tax began in 2017. Under the new fiscal framework, £737m of the £941m will be offset by a recalculation of the Barnett formula which will mean a £204m reduction overall next year. The new system recalculates the block grant to reduce it by the money raised from devolved taxes.

Income tax receipts were forecasted at £11.8bn but only £10.9bn was actually raised. The Scottish Government chose not to uplift the higher rate band in the 2017/18 budget so the number of higher and additional rate taxpayers in Scotland increased. Whether this had an effect on reducing tax receipts or whether the initial forecast was unrealistic is unclear. There will be more evidence to determine if higher rate payers are modifying their behaviour to avoid tax when the data for 2018/19 is published next year.

On development, The Oil and Gas Authority (‘OGA’) has invited applications to explore 768 blocks or part-blocks of the North Sea and West of Shetland. This is the 32nd round of licensing for exploratory drilling over more than 50 years. The round includes co-operation on license timing with the Faroe Islands government for the first time. The OGA has also provided access to information from the past drilling of wells, seismic surveys and pipelines. The data will increase the chances of finding oil and gas, reducing financial risk. A report last year estimated the UK has enough oil reserves to sustain production for the next 20 years. Successful applicants should hear by the second quarter of 2020.

Barclays has announced that Kilmarnock will be the next location for its growth initiative, Thriving Local Economies. The programme involves working closely with leaders from businesses, government and education over a three-year period to identify opportunities to boost the local economy.

Borders, Dumfries & Galloway and the three other cross-border councils plus the Scottish and UK governments have signed the heads of terms for the Borderlands Growth Deal. The two governments have confirmed funding of up to £350m and agreed to uplift the deal with an extra £45m. Projects under consideration include a £10m feasibility study into extending the Borders Railway beyond Tweedbank to Carlisle, Carlisle Station Gateway, Chapelcross Energy Park near Annan, Berwick Theatre and Conference Centre and the Mountain Bike Innovation Centre in the Borders. Second phase projects might include a play village at Alnwick Garden, the Star of Caledonia landmark sculpture at Gretna and a dairy innovation centre in Dumfries and Galloway. The funds will be deployed over 10 years by the Scottish government and over 15 years by the UK government.

A 74 page report commissioned by the Scottish government outlines the role a new enterprise agency can play in aiding growth and creating jobs in Southern Scotland. Like most reports, its key recommendations include better transport improvements (such as extending the Borders Railway) a plan to attract young people, better tourism promotion and an overhaul of town centres. In June, the Scottish Parliament passed legislation allowing for the creation of the new enterprise agency. Dumfries & Galloway has the lowest productivity ranking in Scotland at 30% below the UK average and the Scottish Borders is third worst at 28%. In UK terms, Southern Scotland only outperforms Cornwall and Lincolnshire.

Until 2020, Scotland will continue with two enterprise agencies. The most northerly, Highlands and Islands Enterprise, owns the Cairngorm funicular, which will remain out of service this winter highlighting the problems which can occur when the state gets involved in leisure businesses. The UK’s highest railway has been out of action since October last year due to structural problems. Built at a cost of £26m and opened in 2001, the railway connects a base station with a restaurant 1,097m up Cairngorm. The Development agency, which also owns the Cairngorm Mountain ski centre, near Aviemore, said public procurement regulations has meant repairs will not be possible until spring or summer next year.

On jobs, oil company EnQuest is to cut about 80 jobs at the Sullom Voe terminal in Shetland. The company is currently in talks with former operator BP to continue exporting oil from the Clair Field west of Shetland via an existing pipeline. EnQuest is trying to retain the contract and stop oil being loaded offshore by-passing the terminal. Also, a car dealership in south west Scotland and Cumbria is facing closure. Dumfries-based Border Cars, which employs more than 200 staff, is in talks with up to three potential buyers.

Largely positive Scottish economics driven by bubble tea led exports and Transport Scotland looks at the option of rectifying one of Dr Beechings biggest mistakes

Reading Time: 4 minutesUnemployment in Scotland decreased by 3,000 to 91,000 between February and April, a drop of 0.1% to 3.3%. The South West had the lowest rate in the UK at 2.7%; at 5.7% the North East had the highest. The UK unemployment rate stands at 3.8%.

Scottish average property prices increased by 0.7% to £150,825 during the month which meant annually prices grew by 1.6%. In comparison, UK prices increased by 0.7% to £228,903 during April which held the annual growth rate at 1.4%.

According to the latest figures from the ONS, Scots had the second highest disposable household income in the UK between 2016 and 2017. The UK average is £19,514 per household with only England higher than this at £19,988; Scots had £18,099 of income whilst the Northern Irish narrowly beat the Welsh with £15,813 versus £15,754. Nottingham had the UK’s lowest gross disposable household income (wages or benefits) of £12,445 with London borough Kensington and Chelsea recording household income over £60,000 and a growth rate of 4.9% from the previous year. With inflation over the period at 2.6% the growth in Scots incomes of 0.9% suggests a decrease in disposable income in real terms.

Total output from the Scottish economy grew at its fastest pace for two years in the first three months of 2019 according to the Scottish Government’s figures. GDP was up 0.5% and compared to the same quarter last year, Scotland’s GDP has grown by 1.4%, compared to UK growth of 1.8%. These figures differed from earlier figures from ESCoE which estimated growth in Scotland increased by 0.3% to 2.0% in the year to March 2019. Growth was led by manufacturers’ stockpiling goods prior to a March Brexit and construction but the dominant services sector saw little growth. More than half of the uplift was due to the food and drink sector, led by whisky and salmon, as well as petro-chemicals and pharmaceuticals.

This was evidenced by the latest HMRC figures which showed a 13% increase in the value of all exports driven by growth areas such as offshore oil and gas. Overall the value of goods made in Scotland and sold overseas increased to £32.8bn. Exports of goods from Scotland were up faster than any other part of the UK. The Scotch Whisky Association’s own figures showed more than 300m standard-sized bottles of Scotch were exported between January and March, driven by growth in the Asia-Pacific region and India and China. This partly reflects stockpiling by importers wishing to avoid any disruption from Brexit which was due to take place at the end of March.

More concerning was research by EY which found foreign investment in the Scottish economy dropped by nearly a fifth in 2018 with the number of R&D projects seeing the biggest decline. Scotland remained the second most attractive part of the UK after London, although the Midlands attracted the biggest projects. In 2017, 116 projects came into Scotland but last year this dropped to 94 and of this there were 13 fewer R&D projects. The leading inward investor was the USA; with six of the biggest nine projects. The largest single project was from Japan. Germany and Switzerland both accounted for 8% of the total, and Norway for 7%.

On jobs, Scotland looks set to gain following the announcement of restructuring plans at a finance sector blue chip. M&G Prudential is closing four English offices and uplifting its headcount in Scotland by 800 over the next six years. The firm is expanding its presence in Stirling and Edinburgh where staff from the English offices will be encouraged to relocate. In Edinburgh headcount will treble to 600, with 700 staff in Stirling.

In Glasgow, McQueen’s Dairies has bought the former Muller dairy in East Kilbride, which will allow it to increase its doorstep deliveries. The new facility, over 6.5 acres, is expected to open in spring 2020. The firm employs 400 with up to 100 new jobs now expected over the next two years. Also on dairy, Mackie’s has seen growth of more than 100% in East Asia after its product became a popular ingredient in bubble tea. The sweet drink, which is mixed with tapioca balls, is like an ice cream milkshake and is suited to the firm’s traditional ice cream which has no vanilla.

In Forfar textiles company Don and Low Ltd has blamed a shift in consumer taste towards hard floors from carpets on the loss of 55 jobs in its technical textiles division. The company employs about 400 people in the division and another 100 in the non-woven division.

On transport, Scotland-wide plans to abolish Air Passenger Duty (APD) were dropped in May but passengers flying to and from Inverness have been exempt from paying the tax since 1994. A long-haul flight, routed through London Heathrow or Amsterdam, could currently save £78 on a ticket by flying through Inverness instead of Aberdeen, 92 miles away. Given Inverness is one of the eight regions in Scotland which had labour productivity above the UK average in 2017 according to the ONS’s latest figures, an effective subsidy seems hard to justify.

Reopening the Port Road rail line between Dumfries to Stranraer railway is an option under consideration by Transport Scotland. Although Dumfries and Galloway has the lowest productivity ranking in Scotland at 30% below the UK average according to the ONS, funding for reinstating the 73 mile line seems fanciful given the 40 mile Borders Railway cost over £300m.

Scottish growth surpasses most parts of the UK, the lack of accurate data hampers the deployment of devolved powers and zombie firms causing economic drag

Reading Time: 4 minutesGrowth in Scotland increased by 0.3% to 2.0% in the year to March 2019 according to estimates from ESCoE. At 2.7% and 0.7% London and Northern Ireland had the highest and lowest growth rates in the country respectively. The East of England was the most improved region of the UK with growth accelerating from 0.9% to 1.9%. The UK growth rate for the same period was 1.5%.

Unemployment in Scotland fell by 7,000 to 89,000 between January and March, a drop of 0.2% to 3.2%. At 2.4% and 5.4% the SW of England and the North East had the lowest and highest unemployment rates in the country respectively. The UK unemployment rate stands at 3.8%.

In March, average earnings in Scotland fell to £586 per week. London had the highest average earnings of £762 whereas Northern Ireland had the lowest of £513. In the UK average earnings grew by 3.3% or by 1.5% after inflation.

Scottish average property prices increased by 1.9% to £149,461 during the month which meant annually prices grew by 3.3%. In comparison UK prices dropped by 0.2% to £226,798 during March which cut the annual growth rate to 1.4% although transactions were up by 1.4%.

In its estimate of regional public spending and regional tax revenues in 2018, the ONS concluded that Scotland had a deficit of £13.3bn. This compares with London which had the highest surplus of £34.3bn. On a per person basis the Scottish deficit was £2,452, whereas London had the highest surplus of £3,905 per person and Northern Ireland had the biggest deficit at £4,939. The only areas of the UK to run surpluses were London, the South East and the East of England. At a national level, the UK had a deficit of £636 per person which split into deficits of £106, £2,452, £4,395 and £4,939 for England, Scotland, Wales and Northern Ireland.

The figures above show the importance of accurate data in the Scottish independence debate as Unionists question how Scotland’s deficit of £13.3bn – which increases to £14.6bn on a population rather than geographical basis – would be funded. The importance of obtaining the correct data is highlighted by the Scottish government’s likely decision to delay plans for its budget to include a 50% share of Scottish VAT revenues. It has been estimated that c£6bn of VAT revenues could have been assigned under the Scotland Act (with a corresponding cut in the Westminster block grant), and would reflect an uplift in revenues to the Scottish budget if Scotland’s economy performed well. But because businesses are not required to report separate VAT returns for sales made in Scotland, and the potential cost and burden of making them do so would be significant, accurate data is not available.

Also on devolved powers, Scottish ministers’ plans to set up a devolved air departure tax (ADT) which would immediately cut the levy by 50% have been scrapped. The Scottish Parliament was given powers to charge tax on passengers leaving Scottish airports under the Scotland Act, which came into force in 2017. The Scottish government had wanted to reduce air departure tax by 50% before eventual abolition, but after the First Minister hailed a climate emergency at last month’s SNP conference the policy became untenable. A report by Edinburgh airport predicted that halving the departure tax would create almost 4,000 jobs and add £1bn to the Scottish economy. The report claimed that failing to cut the tax could see Scotland lose out on nearly a million passengers every year. APD raises c£300m in Scotland and £3bn across the UK every year.

Accountancy firm KPMG has found that 9% of Scotland’s companies are zombie firms, suffering from static or falling turnover, low profitability, squeezed margins, high debt levels and a limited ability to invest. In Scotland, it found the highest concentration of zombie firms were in the education sector (29%), followed by mining and extraction (26%), real estate (22%) and automotive (21%). Historically low interest rates allow such firms to survive and cause drag on the economy, preventing economic resources being deployed to more productive firms which can contribute growth. According to KPMG, Scotland had more zombie firms than other parts of the UK.

If zombie firms will not invest then hopes that consumers will keep spending were buoyed by retail sales in Scotland, which increased by 4.4% compared with a year ago – when the run-up to Easter fell in March. This year’s Easter weekend helped to lift food sales by 8.6%, while non-food sales rose year-on-year by 0.8%. Despite this a record number of Scottish shops folded in the first three months of the year. A total of 28 retailers were made insolvent over the period, compared with 68 recorded for the whole of 2018 according to analysis by business advisers French Duncan.

In a vote of confidence in the Scottish economy, Alexander Dennis, the world’s largest producer of double-decker buses, and one of the country’s biggest manufacturers, has been sold to a Canadian firm for £320m. The firm employs c1,000 workers near Falkirk. In a £80m order, Stagecoach will buy 351 greener buses of which more than 300 will be built by the Falkirk firm and its subsidiary Plaxton.

The next phase in Cumbrian nuclear reprocessing plant Sellafield’s 100 year decommissioning programme was announced with the award of a £770m contract to Aberdeen-based engineering services firm Wood Group. The Group will act as design and engineering partner for the Cumbrian site over the next 20 years.

Lloyds Banking Group has announced plans to create 500 high-skilled jobs at a new digital tech hub in Edinburgh. The bank has started recruiting software engineers and data scientists for the hub, which will be based at its Scottish Widows’ headquarters. The new roles will be phased in over the next 18 months.

A veterinary services provider, CVS Group, will invest in a veterinary referrals hospital, small animal practice and specialist pathology laboratory in West Lothian, creating up to 110 jobs. The 30,000 sq ft facility will be adjacent to Livingston Trade Park. CVS owns more than 500 veterinary surgeries in the UK, Ireland and the Netherlands, including 17 branches in Scotland.

Edinburgh-based Tesco Bank said 20 of its staff may be affected by the decision to close its mortgage business. A further 140 staff in Glasgow employed by outsourcing firm Capita may also be affected. In Selkirk, RP Adam, which has operated in the region for nearly 130 years and was bought by US-based Ecolab in 2017, has decided to shut the Borders plant, with the loss of 48 jobs. In Dalkeith, IT firm Hutchinson Networks Ltd has gone into administration with the loss of 94 jobs.

On interventions, the Scottish Government has granted £1m to contact centre firm VeriCall to create 209 jobs in Kirkcaldy. In Inverness, work to transform Inverness Castle into a tourist attraction has got underway with the appointed of a project director and architects. The project is part of the joint UK/Scottish Government £315m Inverness and Highland City-Region Deal.

Scottish unemployment at a record low, whisky galore and the ‘Carstairs Kiss’

Reading Time: 4 minutesUnemployment in Scotland dropped by 8,000 to 93,000 between December and February; a decrease of 0.3% to 3.3%. The SW of England had the lowest unemployment rate in the country at 2.6% and the NE of England had the highest at 5.6%. The national unemployment rate stands at 3.9% and UK average earnings grew by 3.5% or by 1.6% after inflation. Scotland’s unemployment rate is at a new record low and the UK rate is now lower than at any time since the end of 1975.

Scottish average property prices fell sharply by 3.1% to £145,762 during the month – the biggest fall in the UK – which meant prices dropped by 0.2% over the year. In comparison, UK prices dropped by 0.8% to £226,234 during April which cut the annual growth rate to 0.6%.

Official figures from Scotland’s chief statistician showed the economy grew by 1.3% in 2018 which compares with the UK rate of 1.4%. Growth in services was 0.5% and construction 0.4% but production fell by 0.8%

The best way to deliver infrastructure projects was in focus this month as the
The Scottish Futures Trust (‘SFT’) celebrated its tenth anniversary. Originally established by the incoming SNP Government in 2007 as an alternative to PFI – by encouraging greater use of public bonds – it has since more or less abandoned this and evolved into a type of guardian of the public purse, targeting better procurement and the more efficient use of public assets across the Scottish public sector. The Scottish government tasks the SFT with saving between £100m and £150m each year which, on its own figures, it achieves, with for example £139m saved in 2018, outweighing its c£10m operating budget. Sharing project risk with the private sector is sensible as long as the rewards are shared too. Few would argue that the £1.35bn Queensferry Crossing project was not a success in terms of public procurement but disputes with other contractors over paying the cost over-runs on the Crossing coupled with over-runs on the Aberdeen Bypass project has cooled Galliford Try’s appetite for fixed-price contracts . With Carillion gone and Interserve forced to refinance, the private sector must continue to be properly compensated if it is to take on construction risk, otherwise who is going to deliver infrastructure, the state does not have the skills to directly employ the 130,000 in the sector.

Galliford Try has said about 350 jobs could be lost across the UK with most in Scotland. The restructuring will see the Infrastructure business unit in Scotland closed following losses on the two major infrastructure projects mentioned above. The firm remains committed to its existing operations for Morrison Construction in Scotland.

More positively, Scotland continues to benefit from Northshoring, after accountancy firm KPMG announced plans to create up to 400 jobs over the next three years in Glasgow. The firm has already increased headcount by 50 at its managed services hub with roles including data gatherers, analysts and managers. The hub will be based alongside KPMG’s tax centre of excellence in St Vincent Street, where the firm has taken up an additional two floors. KPMG was offered a £1.7m grant to help create the Tax Centre of Excellence in 2013.

The Scotch whisky industry provides £3.8bn in direct income to Scotland according to the Scotch Whisky Association, which claims the sector produces £210,505 of income (or GVA) per employee. Comparatively, the industry is more productive than the energy sector at £173,511 per head, life sciences at £93,735 per head, and creative industries at £60,712 per head. The research is based on work by the Centre for Economic and Business Research which found Scotch whisky contributed 21% to the value of all UK food and drink exports, worth £4.7bn, and that it supports 42,000 jobs, including 10,500 directly employed in Scotland and 7,000 in rural areas plus UK spirits excise duty receipts accounted for £3.8bn.

Given the above, investment in the sector continues to be robust. Diageo has submitted plans to update visitor facilities at two distilleries – Cardhu in Speyside and Clynelish in Sutherland – in the north of Scotland. The move is part of a £150m tourism project which will be link a new Johnnie Walker visitor attraction in Edinburgh to four distilleries. Other visitor distilleries, including Lagavulin, Talisker, Glen Ord, Oban, Dalwhinnie, Blair Athol, Cragganmore and Royal Lochnagar, will also see investment. Work has already started to bring Brora back into production as part of a separate £35m investment programme that will also revive distilling at Port Ellen Distillery on Islay.

In Islay, the Bruichladdich distillery – the biggest private sector employer on the island – will run entirely on renewable energy within the next five years, as part of a £20m investment. Also on the island, the first new distillery for nearly 15 years has opened. The Ardnahoe Distillery was built with a £12m investment from Scottish family-owned Hunter Laing & Company. It includes a visitor centre with retail facilities, a whisky bar and a restaurant and hopes to attract 20,000 visitors a year. Ardonahoe brings the number of working distilleries on Islay to nine.

On state interventions this month, a smart energy scheme is being trialled on Orkney. The scheme will use domestic batteries and electric vehicles to balance the local power network; meeting supply with demand. Backed by £14.3m of UK government funding, Orkney has been chosen because of its high take-up of micro-generation; 10% of homes create their own electricity compared with a UK average of 2.8%, this equates to about 2kW of renewable energy capacity per property.

Four towns across Scotland are to share more than £4m towards their regeneration. Hawick, Mauchline, Inverkeithing and Lochgilphead will benefit from Historic Environment Scotland’s conservation area regeneration scheme (CARS).

In the air, the world’s largest commercial passenger aircraft has begun regular services between Glasgow and Dubai. More than £8m has been spent on engineering work to prepare Glasgow for the arrival of the Airbus A380 double-decker jet.

On the railways, the new £150m fleet of Caledonian Sleeper trains has been unveiled. The 75 new carriages will offer en-suite double rooms for the first time. Initially there will be 484 rooms available on the Lowlander route between London and Glasgow/Edinburgh followed by the Highlander route between London and Aberdeen, Inverness and Fort William. The fleet features 40 Sleeper carriages, each with six showers, 14 Accessible carriages, each with two showers and 347 toilets. Crucially new engineering technology will stop the Carstairs ‘bump in the night’ – the shunt when two sections of the train were coupled together. Operator Serco’s Ryan Flaherty said: ‘On the current train the coaches have to ‘kick’ together to make the contact, but going forward it’s ‘kissing’.

The Scottish economy grows by 0.3%, the latest City Deal is announced and the viability of oil extraction in the North Sea is extended

Reading Time: 4 minutesUnemployment in Scotland fell sharply by 9,000 to 94,000 between November and January; the drop of 0.3% took the overall rate down to 3.4% – a record low. At 2.9% and 5.2% the SW of England and Yorkshire & Humberside had the lowest and highest unemployment rate in the country respectively. The UK unemployment rate stands at 3.9%.

In March average earnings in the Scotland leapt to £628 per week. London had the highest average earnings of £846 whereas the North East had the lowest of £523. In the UK average earnings grew by 3.4% or by 1.5% after inflation.

Scotland’s property prices increased by 0.6% to an average of £149,036 during the month which trimmed the annual growth rate to 1.3%. In comparison UK prices dropped by 0.8% during March which cut the annual growth rate to 1.7%.

The Scottish economy grew by 0.3% in the final three months of 2018 according to the Scottish Government; compared to 0.2% for the UK as a whole. This suggests that for 2018 Scotland’s GDP grew by 1.4% compared to 2017, the same as the UK. Growth has been driven by the services and construction sectors, which both grew by 1.7% in 2018. Services – which makes up the bulk of Scotland’s economy – grew by 0.5% in the last three months of the year, while construction grew by 0.8% in the same period. However, the production sector shrank by 0.9% between October and December, with agriculture, forestry and fishing down by 1.1%. Some interesting analysis by PwC on Scotland’s economy since 1970 has found that if immigration and population growth had matched the rest of the UK, Scotland would have grown faster than everywhere else in the UK except London. Scottish ministers’ call for the right to operate their own immigration policy.

Are HMG’s City Deals having an economic impact? The latest, the Borderlands Growth Deal, has secured £85m over a 10-year period from the Scottish government, then, in his Spring Statement, Chancellor Philip Hammond, unveiled a UK government commitment of £260m. The proposed deal covers the council areas of Dumfries and Galloway, Scottish Borders, Northumberland, Cumbria and Carlisle City. Potential projects include the feasibility of taking the Borders Railway on to Carlisle, Carlisle Station Gateway, Chapelcross Energy Park near Annan, Berwick Theatre and Conference Centre and the Mountain Bike Innovation Centre in the Borders

Oil now and industrial action on some of BP’s North Sea platforms has been announced by the Unite trade union. The dispute centres on staff working three weeks on, three weeks off rotas. It follows separate strikes staged at four other sites operated by Petrofac and Aker for the oil giant Total. Forecasts of how much oil and gas could be produced by the UK offshore industry have been revised upwards. The industry regulator now believes 11.9bn barrels will be extracted by 2050, up from an estimate of 8bn four years ago. So far, 43bn barrels of oil or its gas equivalent have been extracted from UK waters. The new prediction is driven by lower production costs, technical advances and 30 new fields coming on stream. The regulator, reporting to the Treasury ahead of the Chancellor’s Spring Statement, said oil output last year was up 8.9 %, the highest UK oil production rate since 2011; gas production fell by 3%. The regulator’s forecast that capital expenditure would increase was reinforced by Britain’s richest man, Jim Ratcliffe, who announced £1bn worth of investments in the UK oil and chemical industries. Mr Ratcliffe’s Ineos will spend £500m on overhauling the Forties pipeline system – which transports 40% of the UK’s North Sea oil and gas – extending its life by at least 20 years. It will also build a £350m energy plant at his Grangemouth oil refinery. Neptune Energy also said it had agreed a final investment decision with partners BP and Japex to get the Seagull field to production by the end of 2021. Seagull is expected initially to produce about 50,000 barrels of oil and gas per day over its 10-year lifespan.

On other energy sectors, a decision on whether to ban fracking in Scotland has been delayed after the Scottish government said they will launch a further consultation process after the Easter break. The Scottish Government’s experiment with 1970s style state interventions was brought into sharp focus when BiFab – the recipient of an as yet underdetermined amount of state aid – is believed to have lost out on an order for offshore platforms to yards in Belgium, Spain and the UAE. The company has two mothballed fabrication yards in Fife. The Scottish Government took an equity stake in BiFab when it was rescued from collapse last year.

Fife is the largest beneficiary of a £50m Scottish Government fund to improve struggling town centres. Fife is receiving £4.3m. Aberdeenshire has been allocated £3.3m, with £3m going to Glasgow and £2.6m to Edinburgh. All 32 local authorities will receive a share of the cash, with councils deciding how to allocate the money in their areas.

On transport, the two freight ferries that serve the Northern Isles have been bought by the Scottish Government. The MV Helliar and MV Hildasay operate between Aberdeen, Kirkwall and Lerwick and will now join the Caledonian Maritime Assets Ltd fleet. Scotland’s railways will see Network Rail spend more than £4bn over the next five years to help prepare for a long term rise in passenger numbers. Some of the projects which were outlined include relieving overcrowding on the East Kilbride and Barrhead services and improvements to the Portobello junction in Edinburgh. Over the next five years the budget for track maintenance and renewal work will rise by 21% to ensure sufficient capacity for 100m passenger journeys a year. Network Rail will also begin consultation on a long-term development plan for Waverley Station in Edinburgh. A partnership of Network Rail and the City of Edinburgh Council will look at a mezzanine floor above existing platforms to create more space for passengers.

In the air, Austrian airline Laudamotion is to launch a direct service between Edinburgh and Vienna in the autumn. The airline, which operates as Lauda, will fly between the cities three times a week. Laudamotion was founded by Formula 1 racing legend Niki Lauda but became a fully-owned subsidiary of Ryanair in January.

The former Pinneys of Scotland plant in Annan could see 120 jobs at the site after the factory in Dumfries and Galloway was bought by food processing company Bhagat Holdings Limited. The company will invest £9m of capital in Annan unlocking a £1.7m grant. About half the jobs at a Scottish legal firm which has entered administration could be saved as its business is transferred to other companies. Morisons LLP employed more than 80 people; its Glasgow business will be taken over by Blackadders and its Edinburgh business by Thorntons. About 120 jobs are to be lost after rail maintenance company Gemini Rail Services in Springburn confirmed it is to close its depot which carries out service, maintenance, repair, overhaul and upgrades on trains for ScotRail.