According to Ms Houston, Scotland’s reliance on public service sectors, which are not projected to grow rapidly, is hindering its economic growth. She emphasizes that the key sectors that will drive growth in the future are business services and information and communications, in which Scotland has a smaller share compared to the UK average. This explains why Scotland’s growth is weaker.
Kay Neufeld, the head of thought leadership at the Centre for Economics and Business Research, adds that Scotland has been impacted by the decline in the oil and gas sector, which has traditionally been a significant contributor to its economy.
Scottish government data reveals that Scotland’s share of North Sea revenue was £9.4bn in 2022-23, a significant increase from £2.4bn in 2021-22 due to the implementation of a windfall tax.
Neil Gray, the Energy and Wellbeing Economy Secretary, acknowledges the sector’s economic importance but emphasizes the need for a faster transition to net zero, reflecting the country’s commitment to environmental sustainability.
Mr Neufeld suggests that political instability in the region, particularly with regards to the push for a second independence referendum, could also negatively impact economic growth and investment.
Furthermore, the restraint in public spending by the UK Government is expected to contribute to limited growth in the public services sectors. Ms Houston notes that while health and social services are projected to grow, administrative roles in the public sector face a weaker outlook.
In addition, Scotland’s reliance on the manufacturing sector poses a challenge, as job losses are expected due to increased automation.
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