Inverstors give us a vote of confidence
Upbeat economic news is welcome, but collaboration will be the key to future success, says
After 15 months of unremittingly bad news and increasingly bitter political division, this week there was unexpected and very welcome cheer in the unlikely shape of the Ernst & Young Scotland Attractiveness Survey.
I accept that foreign inward investment reports from business and accountancy consultants aren’t everyone’s first choice of weekend reading, but that Scotland bucked the European trend with a growth in the number of foreign companies investing in the country during 2020 should give cause for optimism.
Described by the authors as “a highly creditable and gratifying performance”, the study showed that while new projects across Europe fell 13 per cent, and the UK as a whole down 12 per cent, the Scottish total edged up from 101 schemes in 2019 to 107 last year. For gratifying perhaps substitute miraculous, but nevertheless it represents an international vote of confidence in Scotland’s business landscape.
Three other recent surveys paint a similarly upbeat picture, with a Tech Nation report putting Edinburgh fourth in the UK for venture capital investment in technology companies and a World Tech Hotspots list compiled by Carphone Warehouse ranking Edinburgh third and Glasgow ninth in the UK.
Yesterday, the online business service Oberlo.com placed Edinburgh 27th in a world league for entrepreneurial success, citing Covid support, logistics, access to global markets and small business loans as advantages.
Despite domestic criticism of the UK Government’s actions, the EY report showed that of 550 business surveyed, 48 per cent said the UK was in their top three of European countries with the most credible and investment-friendly Covid-19 recovery plan.
It also found that over half of businesses recognised that the digital economy was the most important sector, followed by clean technology and renewables. The top two factors for making investment decisions were the availability of a workforce with technology skills (92 per cent) and the innovation rate and digital engagement of the general population (90 per cent).
But a separate section carries a warning; political and regulatory stability (53 per cent) is the top priority when investors choose a country, ahead of skills and infrastructure (44 per cent), so instability is a risk.
The methodology can be challenged, and further questions are needed to understand when uncertainty becomes instability, but it’s not a fear shared by one of Scotland’s most successful digital entrepreneurs, Chris van der Kuyl, the founder and chair of Dundee’s 4J Studios which produced the Minecraft video game.
I was privileged to join the panel of BBC Scotland’s Debate Night programme with him on Wednesday, during which he said that Scottish political uncertainty was not featuring in his conversations with foreign investors.
Both sides of the political divide will, of course take from that what they want, with one claiming it as evidence SNP achievement despite Westminster, and how much more is possible with independence, and the other arguing so much more is possible if only the uncertainty of political upheaval was removed.
As a Conservative councillor, obviously I am of the latter view, and on Wednesday’s show public relations businessman and EX-SNP MSP Andrew Wilson was of the other, somewhat controversially describing the fiscal transfer of UK tax receipts to help fund Scottish public services as a “handout”. Mr Wilson claimed Scotland raised enough in tax than the pre-covid Scottish Government budget and social security payments combined, which might be true, but only just, with 2019-20 tax receipts of up to £66bn compared to £66.3bn from adding Scottish Government services costing £42.5bn to an additional £23.8bn in UK welfare and pensions spending.
Total government expenditure in Scotland was £81bn, and it’s hard to believe investor confidence would rise if a new independent government was wrestling with that shortfall, on top of the problems created by capital flight, currency change and the now inevitable hard land border with a noneu state.
Earlier in the week the Scotlanduk relationship was the subject of a fascinating seminar organised by the Reform Scotland think tank, with the former Permanent Secretary at the Department for Exiting the European Union, Philip Rycroft, and Ciaran Martin, the Cabinet Office’s Constitution Director when the Edinburgh Agreement to frame the 2014 referendum was signed.
They have great insight into the workings of the British state and are clearly enjoying the freedom to speak out about the current incumbents of Downing Street, but they seemed to blame most of Scotland’s political problems on the UK Government; the weaknesses of the devolution settlement, how Brexit swept away the assumption of England’s “selfdenying ordnance” of imposing on Scotland, and that so-called “muscular Unionism” was “asserting the symbols of the state that a lot of people are finding objectionable … over the heads of the democratically elected devolved government”. That the SNP has no interest in making the UK work received only a passing acknowledgement.
A focus on high politics was perhaps inevitable given their backgrounds, but there was little time to delve into the brass tacks of the economic impacts on ordinary people, and while Boris-bashing has become fashionable amongst ex-civil servants they seemed dismissive of the UK Government’s constructive approach to direct investment.
On Wednesday night Mr Wilson once again emphasised that independence would be hard but with the evidence of the EY survey, replacing confrontation with collaboration must surely be the better way forward. All or nothing has served no-one, as Messrs Rycroft and Martin will testify.