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Introduction

The latest Scottish Annual Business Statistics (SABS), sourced from the Annual Business Survey (ABS), allow detailed analysis of the structure and performance of businesses in Scotland over the period 2008 to 2015. The ABS covers the "non-financial business economy", which accounts for approximately two thirds of the economy. The main sectors not covered are the financial sector & parts of agriculture and the public sector. These statistics are therefore best suited to the analysis of individual industries rather than the economy as a whole.

To set the SABS results in context it is useful to consider the performance of the Scottish economy as a whole in terms of Scottish Gross Domestic Product (GDP). Scottish GDP in constant basic prices grew each year from 1998 reaching a peak in Q2 of 2008. Scotland then entered recession, which lasted six quarters and returned to growth in Q1 of 2010. Further short periods of economic contraction occurred later in 2010, and then in early 2012. Since 2012 there has been year-on-year growth. The most recent figures show that the Scottish economy grew by 0.7 per cent during the first quarter of 2017, following a contraction of 0.2% in the previous quarter.

Notes:

  • where "manufacturing" is referred to, this covers Section C of Standard Industrial Classification (SIC 07) codes
  • where "construction" is referred to, this covers Section F of SIC 07 codes
  • where “services” are referred to, this covers Sections G to S of SIC 07 codes (but does not include Section K "Financial and insurance activities" and parts of the public sector which includes Section O "Public administration and defence")
  • where "remaining sectors" are referred to, this covers Sections A, B, D and E of SIC 07 codes (but does not include parts of agriculture under Section A)
  • where GVA is referred to, this is approximate Gross Value Added at basic prices.  The main drivers of GVA are: Turnover (the main component of income) and Purchases (the main component of the consumed goods and services).
  • SABS financial data are in current prices i.e. the values have not been adjusted to take account of inflation.

Sector contributions

Broad sectors

In 2015, cash terms GVA in the services sector amounted to £54.4 billion, compared to £12.5 billion in manufacturing and £7.1 billion in the construction sector. The remaining sectors, covered by SABS, accounted for £16.0 billion (oil and gas extraction accounted for £6.6 billion of this, note that SABS includes off-shore oil and gas activity).

Between 2014 and 2015, GVA in the services sector increased by £2.6 billion (5.0%) and construction GVA increased by £0.6 billion (8.4%). However, manufacturing GVA reduced by £0.9 billion (-7.0%). GVA for the remaining sectors, covered by SABS, reduced by £1.9 billion (-10.6%); this was due to falling GVA in the oil and gas extraction sector driven by the decline in the oil price.

Services

In 2015, the two largest contributions to GVA within services came from:

  • the retail trade sector at £6.6 billion (12.1% of total services GVA); and
  • the architectural and engineering activities sector at £5.0 billion (9.2%).

In 2015, the local authority areas contributing most to total GVA within the retail trade sector were Glasgow City (13.1%), Edinburgh City (12.8%) and Aberdeen City (8.7%). Please see related Map for Local Authority Area share of Scotland's Retail sector.

The two services industry divisions experiencing the largest absolute increases in GVA, between 2014 and 2015, were:

  • the head offices and management consultancy sector - up £542 million (+33.4%); and
  • the computer programming sector – up £539 million (+25.1%).

The two services industry divisions experiencing the largest absolute decreases in GVA, between 2014 and 2015, were:

  • the architectural and engineering activities sector - down £450 million (-8.2%); and  
  • the retail trade sector – down £431 million (-6.1%).

Manufacturing

In 2015, cash terms GVA in the manufacturing sector amounted to £12.5 billion.

Chart 1 below shows that the combined industry divisions making the largest contribution to manufacturing GVA in 2015 were "Food, Beverages and Tobacco products" (31%) (covers SIC 10-12) and "Basic and Fabricated metals, Machinery, Motor Vehicles and Other transport equipment" (23%) (covers SIC 24-25 & 28-30). The "Food, Beverages and Tobacco products" sector has contributed the most to manufacturing GVA in every year since the start of the series in 2008.

Chart 1: Manufacturing sector 2015 - Shares of the sector's Units, Employment, Turnover & GVA

Manufacturing sector 2015

In 2015, the two largest contributions to GVA within manufacturing industry divisions came from:

  • the manufacture of beverages sector at £2.3 billion (18.5% of total manufacturing GVA); and
  • food products at £1.5 billion (12.2%).

The two manufacturing industry divisions experiencing the largest absolute increases in GVA, between 2014 and 2015, were:

  • the manufacture of beverages sector - up £167 million (+7.8%); and
  • the manufacture of motor vehicles, trailers and semi-trailers sector – up £58 million (+26.1%).

The two manufacturing industry divisions experiencing the largest absolute decreases in GVA, between 2014 and 2015, were:

  • the manufacture of fabricated and metal products sector - down £351 million (-23.3%); and  
  • the machinery and equipment (nec) sector – down £235 million (-22.9%).

In 2015, the local authority areas contributing most to total GVA within the manufacturing sector were Fife (10.7%), Aberdeen City (9.5%) and Glasgow City (8.6%). Please see related Map for Local Authority Area share of Scotland's Manufacturing sector.

The two local authority areas experiencing the largest absolute increases in manufacturing GVA, between 2014 and 2015, were:

  • Moray - manufacturing GVA up by £83 million (+20.4%); and
  • Fife – manufacturing GVA up by £66 million (+5.2%).

The two local authority areas experiencing the largest absolute decreases in manufacturing GVA, between 2014 and 2015, were:

  • Aberdeen City - manufacturing GVA down by £468 million (-28.2%); and  
  • Aberdeenshire – manufacturing GVA down by £247 million (-22.5%).

The reduction in manufacturing GVA in the North East of Scotland may be linked to the decline in the Oil price.

Construction

In 2015, cash terms GVA in the construction sector amounted to £7.1 billion. Construction GVA was comprised of:

  • specialised construction trades at £3.5 billion (49.6% of total construction GVA);
  • construction of buildings at £2.2 billion (30.5%); and
  • civil engineering at £1.4 billion (19.8%).

Within the construction sector, between 2014 and 2015, GVA increased for construction of buildings by £269.3 million (14.1%), civil engineering was up by £240.1 million (20.4%) and specialised construction trades was up by £45.2 million (1.3%).

In 2015, the local authority areas contributing most to total GVA within construction were Glasgow City (14.8%), Aberdeenshire (8.0%) and North Lanarkshire (7.7%). 

Looking at the construction sector in more detail, Chart 2 below shows that "Construction of residential and non-residential buildings" (SIC 41.2) and "Electrical, plumbing and other construction installation activities" (SIC 43.2) sub-sectors together account for almost half of value added in the construction sector.

Chart 2: Construction sector 2015 - Shares of the sector's Units, Employment, Turnover & GVA

Construction sector 2015

Company Ownership

Company Ownership

In 2015, only 4.7% of business sites in the Scottish non-financial business economy were foreign-owned, however these foreign-owned businesses contributed 29.2% of Scotland's non-financial business economy GVA. One factor driving this is that foreign-owned businesses tend to be larger (in terms of employment) than UK-owned businesses, but the sectors that foreign-owned businesses tend to operate in also has an impact.

Within manufacturing, foreign-owned businesses accounted for 42.3% of GVA and 32.4% of employment, whilst UK-owned Scotland based businesses accounted for 45.4% of GVA and 57.3% of employment.  The remaining GVA and employment is accounted for by UK-owned businesses based in the Rest of the UK (12.4% of GVA and 10.2% of employment).

Within construction, foreign-owned businesses accounted for only 7.6% of GVA and 7.0% of employment, whilst UK-owned Scotland based businesses accounted for 77.6% of GVA and 84.2% of employment.  The remaining GVA and employment is accounted for by UK-owned businesses based in the Rest of the UK (14.8% of GVA and 8.8% of employment).

Within services, foreign-owned businesses accounted for 22.0% of GVA and 14.3% of employment, whilst UK-owned Scotland based businesses accounted for 57.1% of GVA and 66.1% of employment.  The remaining GVA and employment is accounted for by UK-owned businesses based in the Rest of the UK (20.8% of GVA and 19.6% of employment).

Chart 3 shows that the construction sector had the smallest proportion of foreign-owned employment, where 7% of employment was foreign-owned contributing 8% of value added. This contrasts with the primary sector (includes Oil & Gas and Utilities), where around 43% of employment was foreign-owned contributing 53% of value added.

Chart 3: Shares of Gross Value Added and Employment by sector and ownership, 2015

Gross Value Added by sector and ownership, 2015

Growth Sectors

Growth Sectors

Scotland's Economic Strategy 2015 reaffirms the Scottish Government’s focus on key growth sectors of the economy.  These key growth sectors include:

  • Energy (including renewables)
  • Sustainable Tourism
  • Creative Industries (including digital)
  • Life Sciences
  • Financial & Business Services
  • Food & Drink (including agriculture & fisheries)

SABS includes the GVA and Turnover data for the Growth Sectors as defined using Standard Industrial Classification (SIC) 2007 codes.

Between 2014 and 2015, with the exception of the Food & Drink and Energy, all the growth sectors (as covered by SABS) experienced an increase in GVA.

Energy

Note that the SABS energy sector results include off-shore oil and gas activity; GVA associated with off-shore activity, under UK regional accounts procedures, is normally allocated to a separate ‘Extra Regio’ category rather than allocated to a region within the UK.

In 2015, GVA in the energy sector in Scotland amounted to £16.4 billion – down 12.9% (£2.4 billion) on 2014.  The steep GVA decline over the latest year has been driven by the oil & gas extraction sub-sector (down from £9.3 billion in 2014 to £6.6 billion in 2015). The engineering related scientific and technical consulting activities sub-sector also experienced a fall in GVA from £1.7 billion in 2014 to £1.2 billion in 2015. 

Sustainable Tourism (tourism-related industries)

In 2015, turnover in the tourism-related industries sector in Scotland amounted to £6.9 billion (up £99 million or 1.4% on 2014) and GVA amounted to £3.8 billion (up £69 million or 1.9% on 2014).  The sector has experienced year-on-year growth in GVA and turnover in every year since 2011.     

In 2015, the local authority areas with the highest tourism-related industries sector GVA were City of Edinburgh (24.3% of Scotland’s tourism-related industries GVA), Glasgow City (11.3%) and Aberdeen City (7.2%). Please see related Map for Local Authority Area share of Scotland's Sustainable Tourism.

The tourism-related industries sector play a particularly important part in the economies of some of the more rural local authority areas – for example, in 2015, 10.9% of Na H-Eileanan Siar’s non-financial business economy GVA was generated by the tourism-related industries sector, this compares to 4.2% for Scotland as a whole. Please see related Map for Sustainable Tourism's contribution to Local Economy.

Creative Industries

In 2015, GVA in the creative industries sector in Scotland amounted to £4.6 billion (up £889 million or 23.6% on 2014). The GVA growth over the latest year has been driven by GVA growth in the software/electronic publishing sub-sector (GVA up £461 million) and the design sub-sector (GVA up £309 million). 

Creative Industries sector has experienced year-on-year growth in GVA and turnover in every year since 2010.

Chart 4 below shows the GVA performance of sub-sectors within the creative industries sector between 2008 and 2014-15. It shows that the "Visual Art Domain" (includes Design, Architecture & Advertising) and "Software & electronic publishing" sub-sectors have made the largest contributions in all years.

Chart 4: Creative Industries 2008 v 2014 v 2015 - Gross Value Added by sub-sectors

Creative Industries 2008 v 2014 v 2015 - Gross Value Added by sub-sectors

Life Sciences

In 2015, GVA in the life sciences sector in Scotland amounted to £1.3 billion – this represents an increase of £86 million or 7.2% on 2014. 

The increase in life sciences sector GVA over the latest year was driven by the research and development on natural sciences/engineering sub-sector which increased its GVA by £107 million (17.6%).

Chart 5 below shows that the sub-sectors making the largest contribution to Life Sciences GVA in 2015 were "Other research and experimental development on natural sciences and engineering" (55.9%) and "Manufacture of basic pharmaceutical products and pharmaceutical preparations" (29.0%).

Chart 5: Life Sciences - Gross Value Added by sub-sectors in 2015

Chart 5: Life Sciences - Gross Value Added by sub-sectors in 2015

Financial and Business Services (partial)

Totals for the Financial and Business Services growth sector relate only to those sectors fully covered in SABS – and so Financial & Insurance Activities are not included. The SABS results therefore really only cover the business services sector within the growth sector.

In 2015, GVA in the business services sector in Scotland amounted to £7.8 billion, representing a £326 million (or 4.4%) increase on 2014. The GVA growth over the latest year has been driven by management consultancy activities sub-sector (GVA up £439 million) and other business support service activities sub-sector (GVA up £190 million). Whereas, the other engineering activities sub-sector had the largest decrease in GVA between 2014 and 2015 (GVA down £171 million).

Food and Drink (partial) 

Totals for the Food and Drink growth sector relate only to those sectors covered in SABS – and therefore agriculture is not included.  Food and Drink, as presented in the SABS results, relates only to:

  • SIC 3: Fishing and Aquaculture 
  • SIC 10: Manufacture of Food Products
  • SIC 11: Manufacture of Beverages

In 2015, GVA in the food and drink growth sector (as covered by SABS) in Scotland amounted to £4.1 billion – representing a £90 million (-2.2%) decrease on 2014.  The overall figures, however, mask a difference in performance in the sub-sectors - with GVA for the fishing sub-sector (SIC 3) decreasing by £131 million and the food manufacturing sub-sector (SIC 10) decreasing by £125 million, compared to an increase of £167 million for the beverages manufacturing sub-sector (SIC 11).