Building sustainable growth

GDP is the lowest common denominator of economic success – telling us much about quantity but little about quality. Currently it shows that Scotland’s recovery from the recession is almost at a standstill.

The question we rarely ask, despite quarter after quarter of scrutiny when new figures emerge, is whether Scotland’s growth is sustainable. Sustainable economic growth means it can be maintained without creating other significant economic problems, especially for future generations.

If only there was a way to release GDP of its considerable political equity. GDP is kicked around between government and opposition, neither agreeing on the implications for businesses. That lack of consensus trickles into the economy and encourages us all to weigh in – is it good or bad?

If we are growing within our means, whether as a country or a business, we should value the long-term benefits of that. But GDP alone cannot tell us this, though still we rely on it. The Scottish Government clearly states its desire for sustainable growth, which it defines as steady, and enduring. While it has two Gdp-related purpose targets, it has also set out other measures such as labour market participation, reducing inequality and social cohesion.

I find myself asking why we rarely hear about the whole picture holistically, nor even the sum of the parts. If country and commerce both value longterm thinking, why don’t we measure ourselves against it more openly?

Sustainable growth is not the same as low-risk growth. Investment in a long-term goal might mean forgoing short-term returns. The survival of a business might require such an approach. I’m sure car makers and the oil and gas supply chain would argue sustainable growth is not the easy option at the moment. But if this connection was more clearly made, we might better address low productivity and encourage real wage growth thanks to a longer term vision.

The legal sector is not immune to this bigger picture. We see disruption ahead. The traditional model of legal business is changing and we are all future gazing to understand what decisions we should take now. These decisions have to be explained in the wider context.

The difference is, as business leaders, we do not have to judge our performance with one number. We can be more holistic in measuring success. Sustainability, whether commercial, environmental, social or all three, is also a mark of success.

In this, country and commerce diverge. GDP demeans the complexities of business and of economic growth and does not help to explain whether we are on a sustainable trajectory. It is high time we all understood whether that is the case. Chris Harte, CEO of Morton Fraser LLP