The growth targets are "trackers", and their achievement will be dependent on Scotland's GDP growth rate matching the rates of our comparator nations - UK by 2011, and the small EU countries by 2017 - by the target dates. Therefore past trends provide an indication as to the nature of the challenge of these targets.
Match UK Growth by 2011 Target
The latest data show that over the last thirty years (1975-2005), Scotland's annual average GDP growth rate was 1.8%, significantly below the UK average of 2.3%.
Over the last 10 years (1995-2005), Scotland's annual average growth rate was 2.2%, compared to 2.8% for the UK. Scotland's growth has lagged that of the UK overall in nine out of the past ten years.
The latest GDP figures (2007 Q2) show annual growth of 2.3% in Scotland, compared to annual growth of 3.1% in the UK.
Chart: Scotland and UK annual growth rates, and 10 year average growth rates
The 2007 Pre-Budget Report forecasts that in 2010 (the closest forecast for 2011), UKGDP growth will be in the range 2.5 - 3 per cent.
Match small EU countries by 2017
The small EU countries are defined here as: Austria, Denmark, Finland, Ireland, Luxembourg, Portugal, and Sweden. There are two broad approaches to calculating the average growth rate for these countries. These calculations cover 30 year (1975-2005), and 10 year (1995-2005) periods - 2005 is the most recent year for which small EU countries' data exist - and are based on the following approaches:
- A weighted approach, whereby the average is calculated by apportioning a weight to each of the seven countries that accounts for its relative economic size; and
- An unweighted measure, where each of the seven countries' individual long-term growth rates has been added together and the total divided by seven to give a small EU countries' average ( i.e. all countries are weighted equally).
A comparison of the average growth rates is shown in table 1.
Table 1: 30 year, and 10 year average growth rates for small EU countries, Scotland, and UK
The weighted approach for calculating the growth of the small EU countries is the most appropriate for making comparisons with Scotland - and will be used for measuring progress against this target. All averages vary a lot according to time period chosen.