Building a New Scotland: A stronger economy with independence

This paper sets out the Scottish Government’s proposals for the economy of an independent Scotland. It explains what these proposals would mean for you, for businesses, and for Scotland as a whole. It is the third in the 'Building a New Scotland' series, focusing on independence.


Automatic stabilisers

Automatic stabilisers are government policies that offset economic fluctuations through their normal operation, without additional intervention by government. For example in times of weak economic performance and higher unemployment, spending on employment support increases due to an increase in claimants, supporting consumer demand without additional government action

Block Grant

The Block Grant is the grant received by the Scottish Government and other Devolved Administrations as part of the current cross-UK funding arrangements. Changes in the Block Grant are determined by the Barnett Formula, which provides the Devolved Administrations with a proportion of increases or decreases in UK expenditure on devolved policy. Further detail on the operation of the funding arrangements are set out in: Scotland’s Fiscal Outlook: The Scottish Government’s Medium-Term Financial Strategy and Fiscal framework technical note: May 2022

Carbon Capture and Storage (CCS)

Carbon Capture and Storage (CCS), where Carbon dioxide (CO2) can be captured, transported and stored in depleted oil and gas fields.

Collective Bargaining

Collective bargaining is the official process by which trade unions negotiate with employers, on behalf of their members

Common Travel Area

The Common Travel Area is a special travel zone between Ireland and the UK, Isle of Man and Channel Islands. It dates back to the establishment of the Irish Free State in 1922. Nationals of Common Travel Area (CTA) countries can travel freely within the CTA without being subject to passport controls

Currency peg

A currency peg is where a national government or central bank sets a fixed rate of exchange for its own currency against a foreign currency (or a basket of currencies). A currency peg is often used to encourage trade between countries.

Financial system

The financial system comprises money, financial instruments, financial markets, financial institutions, regulatory agencies, and central banks

Foreign Direct Investment

Foreign Direct Investment (FDI) or inward investment (which includes investment from the rest of the UK into Scotland) involves a company or institution headquartered outside of Scotland that establishes a base of operations within Scotland, creating jobs, economic opportunities and associated capital investment

Gross domestic product

Gross domestic product is the standard economic measure of the total value of goods produced and services provided in a country during one year

Gross value added

Gross value added (GVA) is the standard economic measure of the value of goods and services produced in an area, industry, sector or region of an economy


The rate of inflation is the change in prices for goods and services over time. Measures of inflation and prices include consumer price inflation, producer price inflation and the House Price Index (ONS)

Natural capital

Natural capital is the environmental resources (e.g. plants, animals, air, water, soils) that combine to yield a flow of benefits to people.


Productivity is commonly defined as a ratio of a volume measure of output to a volume measure of input use

Real wages

Real wages are wages adjusted for inflation

Single Trade Window

An online IT system offering a single point of entry for traders to submit all customs and regulatory information for cross-border movement of goods

Small and medium-sized enterprises

Small and medium-sized enterprises are businesses with up to 250 employees

Sovereign debt

Sovereign debt is issued by a country’s government to borrow money, usually in the form of securities. It is also known as government debt, public debt, or national debt.



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