Trade in Services Report
Examines Scotland’s international trade in services across finance, professional and business services, science, research, creative industries, digital technology and energy. It identifies global growth opportunities and challenges, including market access barriers affecting internationalisation.
Footnotes
1 Later in the report, we will see that these soft barriers affect some sectors more than others. Soft barriers can also lead to relocation of service activity away from Scotland/UK to jurisdiction where customers are based leading to permanent loss of export potential and relevant productivity and employment benefits. These soft barriers are unlikely to show up in data because they vary across sectors and firm size – larger firms may have the resources and not see these barriers as “barriers”.
2 We would like to mention the contribution of Prof. Anirudh Shingal at The Centre for Inclusive Trade Policy for assisting us with a global overview of service sector barriers. We would also like to mention the contribution of Minako Morita Jaeger at the Centre for Inclusive Trade Policy as well for her contribution on key UK sectors and the global environment businesses find themselves in.
3 These “key” sectors were agreed to be in scope before embarking on this work. While the global sectors do not map directly one to one, they are useful to showcase the broader service sector trade environment globally.
4 The primary research was organised by Prosper and engaged members to get the maximum relevant insights. Roundtables were organised in Aberdeen, Edinburgh, and Glasgow and online to get the largest possible evidence base.
5 This feedback was unanimous and served as a cross-cutting theme across all sectors of the Scottish economy. Businesses don’t see “services”, or even goods moving between Scotland and rest of UK as export.
6 As we will see, regulators and accreditation bodies are the key interface where service sector barrier arise and will be at the heart of potential solutions addressing these barriers. This again is a cross-cutting theme across all sectors.
7 These activities are more London centred and have been affected differently by trading barriers. Media focus on “City” tends to focus disproportionately on wholesale and investment banking and not the pensions and insurance industry. https://www.ft.com/content/8d9aca04-5675-4d38-bf22-1fcb2f1a862b. This shows that “financial services” is not a monolith and while there have been no winners due to Brexit, some sub-sectors and businesses have fared better than others.
8 Firms have established EU based subsidiaries to maintain service access, complying with local regulations. (for example solvency II).
9 OECD Regulatory Policy Outlook 2025.
10 EY 2025 Global financial services regulatory outlook
11 BIS Papers | Fintech & transformation fo finacial services.
12 Vijayagopal, P., Jain, B., & Ayinippully Viswanathan, S. (2024). Regulations and Fintech: A Comparative Study of the Developed and Developing Countries. Journal of Risk and Financial Management, 17(8), 324. https://doi.org/10.3390/jrfm17080324
13 World Bank | Regulatory Sandboxes
14 McNulty,D., Miglionico, A., and Milne, A. (2023). Data Access Technologies and the ‘New Governance’ Techniques of Financial Regulation, Journal of Financial Regulation, Volume 9, Issue a2, October 2023, Pages 225–248, DOI | Data Access Technologies
15 Nayak, R. (2021). Banking regulations: do they matter for performance?. J Bank Regul 22, 261–274 (2021). DOI | Banking Regulations
16 EY | Financial Services Regulatory Outlook
17 EY | Financial Services Regulatory Outlook; and Baker McKenzie | Financial Institutions
18 For example, asset managers as well as insurers face a risk where an investment is considered “green” in UK but not elsewhere. This has a much bigger focus on Scotland due to greater focus on insurance and pension funds.
19 EY | Financial Services Regulatory Outlook; and Baker McKenzie | Financial Institutions
20 EY | Financial Services Regulatory Outlook; and Baker McKenzie | Financial Institutions
21 Vijayagopal, P., Jain, B., & Ayinippully Viswanathan, S. (2024). Regulations and Fintech: A Comparative Study of the Developed and Developing Countries. Journal of Risk and Financial Management, 17(8), 324. DOI | Regulations and Fintech; World Bank | Regulatory Sandboxes;
22 This is another example of service trade barriers, the firm noted that that business has continued but only after making the necessary investments and incurring. The firm also noted that any trade data may not show the extent of trade growth not materialised due to barriers
23 A feedback received from our roundtables was that PBS activity in Scotland relies more on relatively smaller firms relative to London. London based firms, by their virtue of their sizes are therefore better placed mitigate PBS barriers,
24 OECD | STRI; and OECD | STRI Update
25 WTO | STRI and Database; and World Bank | STRI Database
26 UNCTAD | Services, trade and development; and OECD | STRI Update
[26] WTO | STRI and Databbase; and UNCTAD | Services, trade and development
27 Thompson Reuters | Future of Professionals; KPMG Ten Key Regulatory Challenges of 2024; and PNC | Professional Services Challenges
28 Thompson Reuters | Future of Professionals; KPMG Ten Key Regulatory Challenges of 2024; and PNC | Professional Services Challenges
29 OECD | STRI; and WB Services Trade Restrictions Database; Thompson Reuters | Future of Professionals; KPMG KPMG | Professional Services Update
30 This feedback was echoed by the accountancy firms in our roundtables
31 Thompson Reuters | Future of Professionals; Professional Services Industry Update Spring 2025; and PNC | Professional Services Challenges
32 It should be noted that Advertising is not a standalone profession in the OECD STRI, but we understand that it is covered indirectly through Digital Trade, Telecommunications, and cross‑cutting professional‑services restrictions.
33 For example. UK architects can no longer work in EU and are seen as “third country” professionals. Bilateral and cooperation agreements do exist but are not a substitute for the automatic regime that existed before.
34 OECD | STRI: Construction, Architecture and Engineering Services
35 At these roundtables, it was also mentioned that the availability of short term business travel has not translated into meaningful access for professional services as the rules limit the nature of activities that can be performed.
36 UNCTAD | Non-tariff Measures Data
37 ESCAP | Next generation non-tariff measures
38 UNCTAD | Trade and the creative economy
39 UNCTAD | Creative Economy Outlook. As fpr UNCTAD’s 36 country survey, see Annex II in p116.
40 ITRC | Creative Economy Outlook
41 UNCTAD Creative Economy Programme, USTR National Trade Estimate Report on Foreign Trade Barriers 2025 and World Bank NTM analysis.
42 Creative industries, by their very nature are people centric and hence suffer disproportionately from mobility restrictions. Stakeholders in roundtables also mentioned that the data on this sector suffers from misspecification, and the support from relevant agencies does not exist as its not considered in line with focus on “ industrial strategy”.
43 OECD | Digital trade regulatory environment
44 KPMG | Regulatory challenges
45 techUK | Trade Strategy and OECD | Digital trade regulatory environment .
46 OECD | Digital trade regulatory environment
47 AFF Insihgt | Non-tariff Digital Trade Barriers
48 KPMG | Regulatory challenges
50 For example, OECD Trade in Value Added (Tiva) report in 2023 reports that approximately 40% of Norway’s “mining and quarrying” exports are service value added (engineering, finance, trade etc.). In general, a higher services value add share implies more of the export value comes from knowledge intensive activities and the country is capturing a greater proportion of the value chain.
51 UNEP Copenhagen Climate Centre: ESC Network | Regulatory Barriers for Energy; UNCTAD | Trade in renewable energy; OECD | Oil and Gas Industry in Net Zero; Oxford Academic | Offshore Oil and Gas infrastructure; World Bank | Regulatory Indicators for Sustainable Energy; World Bank | Enabling FDI; TESS | Trade Barriers and Clean Energy Deployment; WEF | global energy transition challenges and Energy Transition Commission | Securing clean energy technology
52 In our energy roundtables, firms reported setting up local offices in other countries such as Norway and Canada due to national, sub-national regulations.
53 See for example, OECD The Oil and Gas Industry in Net Zero Transitions (2023); World Bank – RISE: Regulatory Indicators for Sustainable Energy; and IEA Energy Technology Perspectives 2023; and OECD/CEER Reducing Regulatory Barriers to the Renewable Energy Transition.
54 This theme of exodus of smaller firms away from UK/Scotland was echoed in our energy roundtable discussion by market participants.
55 OECD | Oil and Gas in Net Zero; and Herrera Anchustegui, I. and Tsherning, R. (2024). Offshore oil and gas infrastructure electrification and offshore wind: a legal exploration, The Journal of World Energy Law & Business, Volume 17, Issue 1, February 2024, Pages 35–53, Oxford Academic | Offshore oil and gas infrastructure
56 For example, offshore energy projects in Nova Scotia typically require firms to demonstrate domestic presence, local staffing, and engagement with local supply chains. While overseas firms are not formally excluded, these requirements raise fixed costs and shift activity toward local establishment.
57 World Bank | Enabling FDI; World Bank | Regulatory Indicators for Sustainable Energy;; UNCTAD | Trade in renewable energy: and ESC Network | Regulatory Barriers for Energy.
58 WEF | Barrier to energy sector growth; ETC - Better, Faster, Cleaner: Securing clean energy supply chains; UK renewables deployment supply chain readiness study | Baringa; and AFF | Tariffs, Trade, and Transition
59 This can also take place through time limited pilot projects to conduct ex post evaluation.
Contact
Email: Morag.Pavich@gov.scot