Edinburgh leads Scotland’s productivity growth; Scottish Enterprise outperforms Highlands and Islands Enterprise at the development agency level

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The Scottish economy grew by 0.2% in the final three months of 2019, according to Scottish Government figures, with construction growing by 0.7% and services 0.5% but production contracted by 1.2. Over the same period UK GDP was flat.

Compared to the same quarter last year, Scotland’s GDP grew by 0.7%. Over the same period, the UK as a whole grew by 1.1%. Overall GDP grew by 0.8% in 2019 compared with 2018. The UK as a whole grew by 1.4% over the same period.

The largest single contribution to growth in the final three months of 2019 came from Business Services & Finance at 0.22% and within this professional, scientific & technical industries added the most at 0.7%.

Like most ‘regions’ of the UK, output per hour in Scotland is below the UK average. Productivity per hour in the country was c3% below the UK average which ranked the country third for 2018. One reason for this is the high levels of hours worked and high productivity in London and South East which pulls up the UK average so much that all other regions fall below it.

The ONS has now released data for a longer period and at a subregional level. This gives further insight into the Scottish performance.

Perhaps the most useful is the 2018 results for the 44 enterprise regions in the UK which comprise the 38 English local enterprise partnerships (LEPs) and six enterprise regions in Scotland, Wales and the border regions.

Thames Valley Berkshire LEP had the best productivity (in terms of hours and jobs) in 2018 at 35% above the UK average whereas the Black Country LEP at 24% below was the worst.

Unsurprisingly, both of the country’s economic agencies recorded productivity just below the UK average. Scottish Enterprise was the best and was ranked 12th at 3% below. Highlands and Islands Enterprise was ranked 15th at c5% below.

In terms of productivity growth between 2010 and 2018 the Coventry and Warwickshire LEP was top with growth of 16%. Twelve economic regions recorded productivity levels lower in 2018 than 2010. The worst performer was the Buckinghamshire Thames Valley LEP which saw productivity drop by 11%.

The country’s results for productivity growth were more mixed. With growth of 5.1% Scottish Enterprise was the tenth best in the UK. Highlands and Islands Enterprise was ranked 30th nationally with growth of just 0.5%.

Two of the country’s subregions recorded productivity above the UK average with Eastern Scotland at +11% and North Eastern Scotland +9%. Of the other three, Highlands and Islands was 4% below the average with West Central Scotland -13% and Southern Scotland -23%.

At district level, led by Edinburgh (+26%), eight of the country’s areas recorded productivity above the UK average. The other fifteen areas dropped below the UK average, with South Ayrshire recording the lowest productivity at -23%.

The growth in hours worked between 2010 and 2018 in West Central Scotland was 9%, beating Highlands and Islands and Eastern Scotland which recorded 7%, and North Eastern Scotland on 6% with Southern Scotland on 5%. In UK terms this level of growth was in the bottom half of the UK’s 41 subregions, with Southern Scotland ranked 39th.

If the increase in economic output is also factored in then the sub regional performances are more mixed. Eastern Scotland was again top and ranked 16th in the UK with growth of 4%, West Central Scotland was placed 27th with 5% growth, just beating Southern Scotland by one place. Highlands and Islands was ranked 23rd with 2% growth but with only 0.7% growth, North Eastern Scotland was ranked 31st.

More data from the ONS showed unemployment in the country was 4,000 lower at 96,000 between November and January; the fall of 0.2% took the overall rate to 3.5%. Northern Ireland had the lowest rate of 2.4%, the North East of England the highest at 6.2%, with the UK rate at 3.9%.

The South East had the highest employment rate at 80% which compared with 74.9% in Scotland where 2.7m are employed; the UK rate was 76.5%.

Scotland’s average property price increased by 0.6% to £152,121, which took the annual increase to 1.6%. In comparison, UK prices decreased by 1.1% to £231,185 during January, an annual growth rate of 1.3%.

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