SCotland Economy

PART 1 – FACTORS INFUENCING SCOTLAND’S ECONOMY

 

Introduction

 

The Independence Referendum and subsequent confusion over whether the New Scotland Act will satisfy the “Vow” may well have exposed a mass state of ennui amongst the Scottish population.  The creative ways in which the same information can be presented to support political strategies does nothing to bring objectivity to deciding the best way the Scottish Parliament can use its new and extended powers.  As an independent body we (“the Commission”) are able to bring a focus to the optimum facts and statistics and select those which are cardinal factors for creating a competitive and fairer future for Scotland – albeit based on the premise that the Smith Agreement prevails.

 

The Scottish Government – maybe as a politically motivated gesture – says the powers in the New Act don’t go far enough.  At the same time they are silent as to what proposals they have for their implementation.  But the new powers will make Scotland one of the most powerful sub-central governments in the OECD.  Without going the whole hog and giving Scotland “full fiscal autonomy” it’s difficult to see what additional powers could be given across which would be to the material benefit of Scottish tax-payers.  Quite the opposite, without being able to control monetary policy and being required to obtain budgetary approval of the Treasury it could well result in Scots being worse off.

The Scottish Government cannot dispute that Smith gives the Scottish Parliament more powers.  But does it give them more power?

 

From a taxation point of view the devolved taxes which will give the Scottish Parliament greater control and responsibility for growing the economy are Income Tax and Local Taxes.  They can also argue that Corporation Tax and VAT are also instruments in managing the economy.  But as a sub-central government they are not essential if there is compatibility with the economic policies of the central government.  The Scottish Government presents a diametrically opposite economic policy and strategy for how economic growth can be managed and the shape of the economy.  However, unless Westminster is prepared to materially amend the New Act, which is highly unlikely, the Scottish Government is faced with implementing a policy and strategy with Corporation Tax and VAT set by Westminster.

Under these circumstances the Commission cannot ignore the influence Corporation Tax and VAT may have on creating competitive and fair taxation.  Fundamental to our deliberations will be the possibility that Westminster may make changes to these two taxes which could be detrimental to the Scottish Government’s plans.

 

The Commission also have to apply similar analysis of the likelihood that the Scottish Government will adopt an income tax policy which is committed to raising some if not all tax rates. Whereas the Westminster Government is committed for this new Parliament to go in the opposite direction.  Any tax on the employee would seem counter intuitive to growing an economy which requires the retention and attraction of highly skilled and mobile workers to increase absolute levels as well as rates of productivity.  Assuming that the Scottish Government will adopt changes to Council Tax recommended by its own Commission the Commission will need to consider how those changes may fit with what we recommend on the other devolved taxes.

 

References

 

Preparation of this discussion paper has involved reference to many sources of information and papers including but not limited to:

  • Papers prepared by SPICE
  • ONS and Scottish Government Statistics
  • Reports by the Scottish Government’s Chief Economist
  • Papers and forecasts by the Fraser of Allander Institute

     

When other specific sources have been referred to they are noted within the paper.  Other information has been obtained from the Web.

 

This paper leans towards the SPICE Paper “Scotland’s economy recent developments” for the simple reason that it is concise in brevity.  There are other recognised authorities who record and forecast Scotland’s economy – forecasts are generally predicated on trends and are subject to being proven materially incorrect by actual events.  For example, in late 2007 and early 2008 the Fraser of Allander Institute, as were many others, was forecasting on-going growth in the Scottish Economy.  

 

And of course experts on the North Sea relied upon heavily by the Scottish Government have been spectacularly wrong to the extent that history may judge some as being incompetent and others – who knew their estimates were relied on – as negligent.  The Scottish Government’s Chief Economist opines that the reductions in volume and price of oil and gas from the North Sea will have little effect on Scotland’s GDP.  Yet anecdotal evidence from US oil companies tells us that they have “given the North Sea up and that there will major redundancies.  This is becoming all too obvious.

 

This discussion paper is not intended to be a forecast of the future economy but an appraisal of some of the complexities and capabilities which need to be assessed to decide how best the Scottish Government can use its new tax raising powers along with its current powers and further powers under the New Act.

 

The opinions of certain individuals have also been taken account of and where relevant are referred to as “Anecdotal Evidence”

 

The Scottish Economy

 

The Scottish Government makes much as to how wealthy Scotland is as a nation – asserting that its wealth deserves a greater degree of income equality and less families in relative poverty.  But how well does this idea stand up to scrutiny?

 

The House of Lords Select Committee on Economic Affairs reported in April 2013 on the Economic Implications of Independence.  Inter alia they compared Scotland with other European Countries of comparable size.

 

 

 

Scotland

Denmark

Finland

Ireland

Population 5.3m 5.5m 5.4m 4.5m
GDP/cap $34,754 $39,545 $36,664 $39,778
Public Sec Debt 82.4% 55.5% 57.4% 49.5%
Tax* 32.7% 38.3% 42% 29.3%

Tax on average worker as a % of labour costs

 

The shape of Scotland’s economy is shown by reference to its employment statistics:

Unemployment currently sitting at 5.5%

Male Unemployment = 6.3%

Female Unemployment = 4.6%

Youth Unemployment = 13.9%

 

Employment rate of 74.3%

Male employment = 76.4%

Female employment = 72.2%

 

Economic Inactivity = 21.3%

Male inactivity = 18.3%

Female inactivity = 24.2%

 

Albeit based on estimated figures the Scottish economy is growing and despite the downturn in the North Sea is predicted to continue to grow.   The EY Item Club reported a 2.7% growth in the economy in 2014 and projected 2.2% growth in 2015.  Fraser of Allander Institute (“FAI”) predicts a 2.5% growth in 2015 resulting in an average projected growth rate of 2.4%.  This compares to a 2014 UK growth of 2.6% with projected growth of 2.7% in 2015.

 

In his paper “State of the Economy” the Scottish Governments Chief Economist referred FAI’s assessment of the potential effect of the oil price fall in arriving at their growth forecasts.  They and the Chief Economist rightly assume that the resulting reduction in fuel prices will have a positive effect on consumer spending.  They assess the potential employment impact positively +9,700 net additional jobs at best and -600 net lost jobs at worse.

 

The Chief Economist highlights certain risks “to a durable recovery” identified by FAI: growth in-balances; further planned fiscal tightening at the UK level: and continuing problems in the Euro Area. He also refers as “headwinds” to “weak conditions in key export markets and sterling appreciation”. 

 

As an independent Commission we are unlikely to be privy to the Scottish Government’s detailed economic forecasting or how it intends to address the Fiscal Deficit that can be attributed to Scotland.  There are a number of competing versions but it is safe to regard the CPPR’s independent forecast for the year 2015-2016 as being a starting point.  They forecast that year’s on-shore deficit to be £14.7bn.  There are also a number of competing opinions on future revenues from the North Sea.  The safest assumption is Nil.

 

Of course under the New Act, as is current practice, the Scottish Parliament does not have to address or concern themselves with the Nation’s Fiscal Deficit.  Their duty is to balance devolved spending with devolved revenues plus the block grant and consequetials.  But the more Scotland’s revenues are disentangled from the rest of the UK the greater the need for accurate economic forecasting and fiscal prudence.

 

There are three several factors on which Scotland’s economy relies, some are:

 

1 – Productivity

 

In 2013 Scotland’s productivity was very similar to that for the whole of the UK and lay in the third quartile of OECD countries:

 

 

The Treasury recently addressed the question of increasing productivity in a publication “Fixing the foundations – creating a more prosperous nation”.  It set out a framework   framework for raising productivity around two pillars:

 

  • encouraging long-term investment in economic capital, including infrastructure, skills and knowledge
  • promoting a dynamic economy that encourages innovation and helps resources flow to their most productive use.

     

    The plan sets out a fifteen-point plan for productivity that takes on the hard choices needed for lasting change:

  1. An even more competitive tax system;
  2. Rewards for saving and long term investment
  3. A highly skilled workforce with employers in the driving seat;
  4. World leading universities, open to all who can benefit;
  5. A modern transport system, with a secure future;
  6. Reliable and low-carbon energy at affordable prices
  7. World class digital infrastructure in every part of the UK
  8. High-quality science and innovation, spreading fast
  9. Planning freedoms and more houses to buy
  10. A higher pay, low welfare society;
  11. 11 More people with a chance to work and progress
  12. Financial services that lead the world in investing in growth
  13. Open and competitive markets with the minimum of regulation
  14. A trading nation, open to international investment
  15. Resurgent cities, a balance economy and a thriving Northern Powerhouse.

     

    Without explicit reference to the Treasury’s plan in June of this year the Scottish Government set out its plans to get Scotland into the top quartile by 2017 “against our key trading partners”.

The plans are said to be predicated on “International evidence which identifies a range of drivers that influence productivity performance, including:

  • Investment in Infrastructure
  • Resource Efficiency
  • A skilled, educated and adaptable workforce
  • Innovation, Commercialisation and Research and Development (R&D)
  • Enterprise
  • Effective and efficient public services
  • A competitive business environment”

    In line with these drivers, the Scottish Government claim their “Economic Strategy” sets out a range of actions to support improvements in Scotland’s Productivity Performance, including:

  • Helping firms to compete in international markets
  • Encouraging leadership development and effective skills utilisation
  • Supporting resource efficiency and the transition to a low carbon economy
  • Investing in Scotland’s transport and digital infrastructure
  • Supporting innovation and commercialisation
  • Ensuring education is responsive and aligned to demand
  • Improving health and well-being
  • Effectively utilising Scotland’s public resources
  • Providing effective and accessible enterprise support

     

     

    2 – Exports

     

Scotland’s top 5 International Exporting Industries
Food and Drink 18% = £5 bn*
Refined Petroleum 12.6% = £ 3.5 bn
Legal and Accounting Business 6.7% = £1.9bn
Machinery and Equipment 6.3% = £1.7 bn
Electronic Products 5.7% = £1.6 bn

* Whisky accounts for 85% of food and drink exports

 

Scotland currently exports £27.9bn of goods and services (2013 figures). This has increased by 20% since 2010 – with the Scottish Government setting a target of a 50% increase by 2017.  50% of exports are accounted for by around 50 companies with only 16% of exports from businesses employing less than 50 people.  International exports of services has almost doubled in a decade to £9.2bn. Manufacturing exports increased by 15% over the same period.  46% of all exports are to Europe (£12.9bn) followed by North America at 15.3% (£4.3bn). Thereafter the largest region is Asia at 10.1% of exports (£2.8bn).

 

Top 20 export destinations (£ million), 2013

 

Rank Destination Total Exports % of all Rank Destination Total Exports % of all

1 USA               3,910   14.0                11        Sweden            715                  2.6                  

2 Netherlands 2,040   7.3                   12        Switzerland     615                  2.2

3 Germany      1,945   7.0                  13        UAE (5)            605                  2.2

4 France          1,845   6.6                  14        Singapore        585                  2.1

5 Denmark      1,420   5.1                  15        China               580                  2.1

6 Norway         1,110   4.0                   16        Australia          435                  1.6

7 Belgium        1,000   3.6                   17        Canada            345                  1.2

8 Eire               920      3.3                   18        Japan               295                  1.1

9. Spain           870      3.1                   19        South Africa    285                  1.0

10 Italy            745      2.7                   20        Brazil               285                  1.0

 

Exports to the Rest of UK exports should be treated with some caution. It is more difficult to ascertain the final destination of sales within the UK as companies have no statutory requirement to collate financial information below UK leveIs. Furthermore, particular sectors face challenges in determining what constitutes an ‘export’. In an Intra-UK situation, this is particularly the case in the service sector where output is harder to quantify and the residence of the final consumer may be less clear.

 

Rest of UK exports in 2013 (excluding oil and gas) are estimated at £46.2 billion. The combined value of international and rest of UK exports in 2013 (excluding oil and gas) are provisionally estimated at £74.1 billion. Rest of UK exports account for 62% of all exports (International and RUK combined) from Scotland

 

Service sector exports to the rest of the UK are of greater importance than for International exports. 26.2% (£12.1 billion) of RUK exports are attributable to manufacturing sector companies and (51.4%) £23.7 billion are attributable to service sector companies. This compares to 60.2% for manufacturing and 33.1% for service for International exports.

 

3– Imports

 

As the SPICE paper “Scotland’s economy recent developments” opines, due to lack of Scottish data imports into Scotland are difficult to estimate let alone be definite about.  But their paper does raise some interesting pointers:

  • There is a substantial and sustained trade deficit between Scotland and the UK as well as with the Rest of the World (excluding exports from the North Sea).
  • In total the North Sea contributes 28% of Scotland’s exports which swings the balance back to a trade surplus.  (Reference to latest projections reduced production in the North Sea would eliminate that positive balance in the early 2020’s).

     

4 – Innovation

 

It is impossible to determine how innovative companies are in Scotland but there are figures published on “Spin-outs” from Universities over the last 20 years:

 

Institution Spin Outs Start Ups Others
Edinburgh Napier University 13 1 0
Glasgow Caledonian University 4 0 0
Glasgow School of Art 0 0 0
Heriot Watt University 33 6 3
Queen Margaret University 1 0 1
Robert Gordon University 11 2 1
Royal Conservatoire of Scotland 0 0 0
Scottish Agricultural College 0 0 0
University of Aberdeen 28 8 0
University of Abertay 5 0 0
University of Dundee 27 2 3
University of Edinburgh 75 183 7
University of Glasgow 25 20 6
University of Highlands & Islands 4 0 0
University of St Andrews 21 2 0
University of Stirling 2 0 0
University of Strathclyde 59 34 5
University of the West of Scotland 0 0 0
Total 308 257 26

Source: Spinouts from Research to Market Survey 2015

 

A fundamental difference between the category of Spin Out and the other categories is that the University retains the Intellectual Property Rights.

 

Although there is no published data as to the scale and sustainability of these successes it is thought that the Life Sciences Initiative and the Strathclyde Technology Innovation Centre are proving their worth and as a consequence substantially outstrip the rest of the UK.

 

Another way of measuring innovation is the number of patents granted.  On average 154 have been granted in the years 2002 – 2014 – only 5.5% of the UK’s average.

 

5 – Entrepreneurship

 

A 2014 report by the World Economic Forum, Fostering Innovation-Driven Entrepreneurship in Europe, dealt with how governments could foster innovation-driven entrepreneurship by improving support services and address market fragmentation.  They highlight the need to promote the necessary attitudes and skills required and the desire and the ability to create scalable entrepreneurial ventures.  To help gather the resources to start up a business, with particular focus on access to capital.  And, to focus on collaborations between entrepreneurs and large corporations that simultaneously improve the innovation capacity of both partners to create growth and jobs across the region

The report suggests that problems facing Europe’s entrepreneurs are not because a lack of willingness on the part of policy-makers or the private sector.  It finds many senior policy-makers at both the European and member state levels, including a number of heads of state and governments, are highly motivated to improve conditions for innovative ventures.

The report senses a large degree of pessimism in European countries and that one significant obstacle to fostering innovation-driven entrepreneurship is a lack of collaboration between the private and public sector, which limits the effectiveness of support programmes.

The report proposes a new for all stakeholders to collectively: 

  • Focus – Developing explicit criteria to help stakeholders identify and invest in momentum-building entrepreneurship initiatives
  • Connect – Establishing a visible, inclusive network of public and private initiatives, which is considered an important aspect of improving support by 89% of survey participants
  • Partner – Achieving both scale and momentum by helping stakeholders to partner across sectors and countries, which is seen as important by 80% of survey participants

     

    The Scottish Government should be applauded for the steps it has taken to foster innovation driven entrepreneurship.

     

    In late 2012 they launched the Scottish Edge Fun and in 2013 gave financial support to Prince’s Trust “Prime Initiative for Mature Enterprise.”  Scottish Enterprise works with 2000+ businesses focusing on growth and the Scottish Loan fund leveraging in private investment by favourable loans.  The Scottish Government also launched a £103 million Renewable Energy Investment Fund.  All of these initiatives report success against the aims and expectations.

     

    In addition the Scottish Government has launched a “Scotland Can Do” initiative.   Ts five broad aims are:

  • an increase in entrepreneurship and innovation activity from individuals and

businesses in Scotland resulting in more businesses being formed and new products

and services from existing businesses;

 

  • more people from all walks of life with the ambition and skills to create, lead and grow successful businesses;

 

  • an education system with entrepreneurship and innovation at its core, seizing the

opportunities presented by Curriculum for Excellence, college reform and the world-leading strength of our universities;

 

  • more of our knowledge and intellectual capital being commercialised and greatly

increased collaboration between business and the academic sector; and

 

  • a greater focus on, and share of, global markets as our business leaders grow in

confidence and expand their horizons internationally.

 

It is too early to say how successful the Scottish Government’s initiatives have been.  However the Global Entrepreneurial Monitor’s (“GEM”) 2013 report for Scotland makes comparison of certain essential factors with the UK and “Arc of Prosperity” countries (that is those neighbours chosen by Alex Salmond as comparators).

 

In 2013 the findings for Scotland can be summarised as:

 

  • low perception of opportunity;
  • greater fear of failure
  • low opinion of the benefits of starting a business;
  • low rates of new or nascent businesses;
  • low expectation to build high employment requirements
  • low funding intentions amongst women with high consumer oriented proposals
  • wealth creation is secondary to life style balance for most women*;
  • low export expectations

     

*Anecdotal evidence estimates that if business ownership rates for women equalled those of men it would increase Scotland’s business enterprises by 108,000.

 

Anecdotal evidence is that although the government sponsored initiatives with private initiatives such as ScotEdge are welcome and help some start-up businesses, funding for most new businesses is hard to come by.  One successful entrepreneur who has built his business over 10 years suggests that the “Bank of Mum and Dad” is the most common source of start-up funding.  He got no State help and relied on his local network to build his business.  He also believes that the fear of failure drove him but acknowledges that it is a major reason for others being reluctant to take the plunge.

 

6 – Inward Investment

 

The EY Attractiveness Survey is commonly accepted as being a reliable report on inward investment although it relies on announcements and not hard achievements.  In their latest report:

 

80 foreign investment projects in 2014 compared to 76 the previous year, resulting in 3,532 jobs compared to 4,165 in 2013 – decline attributed to reduction in manufacturing.

 

The US is the biggest source of inward investment accounting for 40.4% of all projects.

 

This success is also on the back of highest records of UK investment levels.

 

Key sectors for investment include financial services, manufacturing, and scientific research.

 

39% manufacturing

30% sales and marketing

21% research and development

6% logistics

4% testing and servicing

 

The 2014 level of job creation from FDI is at its lowest level since 2009 despite the increase in projects. The peak job creation from FDI was in 2011 with 5,926.  With the US being the biggest investor with over 40.4% of all projects it is interesting to note that the next highest level of investment comes from France yet only accounts for 8.3% of all projects. Thereafter investment comes from Germany and Japan at 5.8% and 5.3% respectively. Scotland is heavily reliant on continued support from the US to maintain current investment levels.

 

It is also interesting to note Scotland’s performance in comparison with rest of the UK. China is the fifth biggest source of projects in the UK yet does not rank in Scotland’s top ten. The most successful sector for attracting FDI is business services achieving 12.6% of projects.

 

Scotland’s five largest investment by companies in 2014 which account for 50% of the new jobs are:

 

Company Location Origin Jobs Sector Existing or New Type
Concentrix Gourock USA 500 Software New New office for business services firm
PRA UK Management Services Kilmarnock USA 403 Financial intermediation Existing Expansion of office
Lockheed Martin Renfrew USA 327 Machinery & Equipment Existing Expansion of office
Doosan Renfrew South Korea 266 Machinery & Equipment Existing New process centre
Blackrock Edinburgh USA 200 Financial Services Existing Expansion of office for investment bank

 

7 – Business enterprises.

 

Since Devolution the number of business enterprises in Scotland has grown “dramatically”.  80% of the growth in the 0-49 category are enterprises with no employees – currently 242,325 in number (employing 10% of the total employed workforce and 14% of the private sector workforce).

Size*

1999

2007

2014

0-49

226,150

273,740

337,135

50-249

3,270

3,490

3,705

250+

2,220

2,255

2,270

Total

232,00

279,495

343,110

*number of employees.

8 – Drivers of wealth creation

Defining the key companies and sectors in the Scottish economy is difficult.  But a 2004 Royal Bank of Scotland report identified four sectors: banking, oil and gas, electricity and transport, as the “biggest wealth creating industries” for Scotland at that time. 

However, just because a company is registered or is head quartered in Scotland, it doesn’t mean to say that it is actively contributing to the Scottish economy.  In many cases, it is taking wealth out to parent companies and shareholders elsewhere.

In the top 15 companies there are four electricity companies and two transport companies created by the privatisation of the public sector. These companies are essentially trading on assets developed by the public sector, securing direct or indirect subsidies from government and enjoying semi-monopolistic market niches.

Only Stagecoach and the Wood Group – owned and controlled by Scottish families – are insulated to some extent from having to satisfy investors outside of Scotland.  Even then they have many employees based outside of Scotland.  The two Scottish Banks employ in excess of 100,000 people outside of Scotland and now mainly invest outside of Scotland.

Of the 15 companies some of the biggest companies have grown through the privatisation of public services and/or mergers and acquisitions.  RBS and HBoS are significant examples.  There are also two transport companies – Stagecoach and First Group; three energy companies – SSE, Scottish Power and British Energy; and Scottish and Newcastle Breweries. 

There are seven oil companies in the top fifteen seven oil companies listed are direct subsidiaries of non-Scottish parents. Even the Scottish registered companies have; the two Scottish banks alone employ nearly 100,000 people outside Scotland. The two banks, whilst clearly significant for Edinburgh, have also in recent years, mainly invested abroad.

Significantly they did not list any companies engaged in construction, chemicals, life sciences and tourism. Since 2004 Ineos has been a major development albeit arising from a take-over.  It is now a driver of change in Scotland. 

In fact the RBS report may shine a light on an attitude to wealth creation which needs addressing if Scotland’s economy is to grow faster than the rest of the UK.  The wealth RBS was referring to was shareholder wealth it is “companies engaged in construction, chemicals, life sciences and tourism” which will drive increased growth and prosperity in Scotland.  Major companies in these activities are owned outside of Scotland and just as 13 of the top 15 do they take wealth out of Scotland and are driven by investor requirements with little or no personal attachment to Scotland.

 

9 – Net-migration

 

After a period of decline in population up to 2000 Scotland’s population has increased from 5.063million to 5,348 million.  There were substantial differences in geographical population change which in essence was through net migration.  The West of Scotland and Tayside experienced substantial decreases in population whereas the Lothian/Fife and Grampian/Highlands experienced increases. Edinburgh continues to experience significant growth in population.

 

Historically, Scotland has been a country of net out-migration, with more people leaving to live elsewhere than moving to live in Scotland. However, since the 1960s, net out-migration has greatly reduced, and from 1990 onwards Scotland has mostly experienced net migration gains. Scotland has now entered a period of net in-migration. Between 2003-04 and 2010-11, there were net gains of at least 18,600 per year. In 2006-07 the net migration gain was 33,000, the highest since these estimates started in 1951. However, in 2011-12 net migration had fallen to 12,700 and in 2012-13 net migration fell again to 10,000. In 2013-14 net migration rose by 7,600 to 17,600 which is the biggest increase since 2006-07.

 

(Source: National Health Service Central Register (NHSCR) patient movements, Office for National Statistics Long-Term International Migration, and the National Records of Scotland rebased international migration estimates for mid-2001 to mid-2011.)

 

The number of people coming to Scotland from the rest of the UK has increased in each of the last three years to 49,200 following small drops in the previous three years. The recent peak of 61,900 was recorded in 2003-04. There was a small decrease in outward migration to 39,700 in 2013-14 from the previous year’s figure of 39,800.

 

In-migration from overseas has increased by 5,000 in 2013-14 following drops in each of the last three years (decreases of 3,200, 8,300 and 7,700 recorded in 2010-11, 2011-12 and 2012-13 respectively). Out-migration to overseas decreased by 900 in 2013-2014.

Immigration into Scotland (from outside the UK) currently accounts for about 10% of the UK’s total

 

The fullest account of SNP policies are contained in a White Paper issued by them in the run-up to the Independence Referendum.] The main points were as follows:

 

  • The objective is to increase Scotland’s working age population in order to promote economic growth.  It commits the Scottish Government to matching “average European (EU15) population growth over the period from 2007 – 2017” and states that an independent Scotland would use immigration as one of the major levers to increase the country’s population.

     

  • An SNP government would pursue an immigration system that would “better meet Scotland’s needs” potentially adding “new categories of skills” and possibly incentivising movement to remote areas to help “community sustainability”.

     

  • The White Paper called for the Post Study Work Visa to be re-established in Scotland. So as to enable students to move seamlessly from study to work.  They say there is “clear indication that business and education in Scotland are equally keen to see the re-introduction of a Post Study Work Visa”.  In their submission to the Smith Commission the Scottish Government called for “aspects of immigration policy, such as the Post Study Work Visa” to be devolved.  The Smith Commission recommended that a Scottish Post Study Work Visa be explored.

 

 

10 – Currency exchange rates

 

In 2008 the value of Sterling collapsed against both the Euro and the Dollar.  Since then it has strengthened against the Euro and remained relatively consistent against the dollar.

Anecdotal evidence I have suggests that companies that rely on exports are finding hedging the exchange rates to European countries more difficult – complaining about shorter cycles than in the past. There are also difficulties when companies trade with emerging markets in dollars.  The dollar has and continues to strengthen against South American and Asian currencies.

 

With the BoE signalling an interest rate rise, continued turbulence in Europe and the emerging markets including BRIC countries, fall in Gold price, low oil and gas prices who would forecast a weakening of Sterling?