Increasing the value of Scotland’s exports is extremely important to the Scottish Government. Internationalisation is, after-all, one of its “4 I” economic priorities (as set out in the 2015 Economic Strategy). Policies highlighted in the Scottish Government’s 2016 Trade and Investment Strategy are given significant budgets each year, and the most recent Programme for Government for 2017-18 mentions “exports” or “exporters” more than twenty times.
So with all this policy focus how are Scotland’s exporters performing? Yesterday saw the publication of the Government’s annual Exports Statistics Scotland publication. This provides figures for 2016, including estimates of international exports and rest of the UK exports, as well as a breakdown of exports values by sector.
This post discusses some of yesterday’s headline statistics; however a more detailed analysis will appear in a SPICe briefing published next week.
International Exports
Yesterday’s figures show a £460 million annual increase in the value of international exports over the year between 2015 and 2016 – a 1.6% (non-inflation adjusted) rise. Much of this increase has been in the food and drink, wholesale services and financial services sectors. The value of goods and services exported to international markets now stands at £29.8 billion, with much of this growth being in non-EU markets.
Although an increase is to be welcomed, export value figures alone don’t tell us how important international trade is to the Scottish economy, or how this has changed over time. One way of doing this is to show the value of international exports as a percentage of Scotland’s onshore GDP:
We can see that as a proportion of total economic output (GDP), Scottish exports have remained around 20% for the past three years.
Rest of the UK exports
The value of exports to the rest of the UK stood at £45.8 billion in 2016, considerably higher than the value of Scotland’s international exports. However, this represents an 8.8% reduction in the value of rest of UK exports. Scottish goods and services sold to the rest of the UK fell by £4.4 billion over the year, the biggest reduction since the data series began. Almost all sectors saw decreases in the value of their exports to the rest of the UK.
One of the largest changes over the year was in the value of utilities exported to the rest of the UK. This fell by £1.6 billion over the year, a dramatic 27% reduction. Government statisticians tell us that this is mostly explained by reduced exports of electricity. We know that less electricity was produced in Scotland during 2016, due to a combination of the Longannet power station closing plus unfavourable weather conditions for the renewables sector. These factors clearly had an impact on Scotland’s rest of the UK exports.
In conclusion…
Total Scottish exports – international plus rest of UK exports – actually fell in value between 2015 and 2016, from £79.5 billion to £75.6 billion. As well as reductions in the value of exports to the rest of the UK, Scotland also exported slightly less to the EU bloc. The biggest growth was therefore seen in international exports to non-EU countries, with the USA continuing to be Scotland’s top international export destination country.
Greig Liddell, Senior Researcher, Financial Scrutiny Unit, SPICe