- 1 May 2019
The National Economic Forum provides a forum for Ministers to discuss the big economic issues of the day with businesses, trade unions, the wider public sector, the third sector and we find these sessions really worthwhile and I hope all of you do too.
The export growth plan which we are publishing today is a good example of the importance of that collaboration because it is an initiative that will only succeed if it is part of a shared effort, a concerted effort from all of us.
So every business and every organisation in this room has a part to play in it and that’s why I’m delighted to see so many people here today to take part in these discussions.
In recent years the Scottish Government has set out a clear ambition for Scotland’s economy. We want Scotland to be the best place to do business in the UK. And as part of that, we want Scotland in the future, just as Scotland has been in the past, to be a country that designs, develops and manufactures the products and technologies of the future, not just a country that consumes the designs, innovations and inventions of other countries.
And of course we already have a strong foundation for achieving that ambition.
Right now our unemployment rate is at a record low. Our productivity is increasing more strongly than in any other part of the UK. Our exports are growing faster than anywhere else in the UK and we remain the most successful part of the UK, outside of London, for attracting inward investment to the country. And we have world class companies across a range of economic sectors - that’s hugely important for the world’s development in years to come. So there’s a lot of success to be positive and optimistic about but we know, and it’s important that we’re frank about this, that we also face challenges. Our recent economic growth has not been as strong as we would like it to be.
In some areas – such as productivity growth – Scotland now compares very well with the rest of the UK, but we still don’t compare well enough with many of our European neighbours.
We also need to be prepared for key challenges and opportunities of the future – such as demographic change, automation, and increasingly importantly, the transition to a carbon neutral economy.
And of course we also need to deal with Brexit. It will be a huge relief to all of you today that I am not going to spend too much time talking about Brexit in detail, I think by now you probably know the views of the Scottish Government.
We believe, and the evidence bears this out, that any form of Brexit will be damaging to the Scottish and indeed the UK economy. We have argued that if Brexit must happen, which we would rather it didn’t then the UK as a whole should stay in the single market and customs union. And of course we propose that any final Brexit deal should be subject to a second referendum. I believe Scotland should have the option of remaining in the EU if the rest of the UK takes a different view.
But that’s not the key point I want to make today, the key point I want to make today and the key point of today’s event is that we mustn’t allow Brexit, whatever happens with it, to define the actions we take for the future of our economy.
If anything, the experience of the last three years increases and underlines the importance of getting on with other parts of our Programme for Government – tackling inequalities, improving public services and, of course, boosting economic growth and making that more sustainable with wellbeing at the heart of all we do. I’ve just come from this morning a conference of the wellbeing economy governments – the governments of Scotland, Iceland, New Zealand to name three – coming together to look at how we look beyond GDP and put the wellbeing of the population at the heart.
So all of that is extremely important and because of that over the last couple of years the Scottish Government has set out measures to promote innovation and growth – for example we have increased support for business research and development; reviewed our enterprise and skills support agencies; and we are in the process of setting up new institutions, and most importantly of all, the Scottish National Investment Bank.
But at the heart of all of that is a commitment to internationalisation.
Internationalisation of course is a part of Scotland’s identity – it is important to the sense of who we are as a country. I know that some of David Cutter’s remarks about Johnnie Walker touched on that point earlier.
For more than two centuries now, people in Scotland have rightly taken pride in the way in which products and inventions from here have found a market and gained a reputation around the world.
And at the current time – and Brexit maybe makes this more important than ever – internationalisation also sends a signal to the wider world that we are and are determined to remain a modern, open, welcoming country.
We want Scottish companies to go out and compete in international market places, just as we want people from outside Scotland to come here to our country to study, work or invest.
However internationalisation isn’t just about our values and our identity. It brings vital economic benefits in its own right.
We know that companies entering overseas markets tend to be more productive than those that don’t. They are more likely to adopt new working methods and develop new products. And they will also – because they operate across many different areas – tend to be more resilient, and less exposed to economic shocks.
So because of that knowledge, the Scottish Government has already taken the important steps to promote exports.
We have already opened up new government hubs in Berlin, Paris, Dublin, London and Canada to strengthen our presence in key markets. And we have doubled the representation that SDI – our overseas development agency – has in continental Europe.
So today’s Export Growth Plan builds on those steps. I know that you have already seen a presentation on some key aspects of the plan so I don’t want to duplicate too much of the information in that. But I do want to take the time to highlight three key points from the export growth plan.
The first is that the target we have adopted – of exports accounting for 25% of our GDP in 10 years’ time - is both important and ambitious.
That’s sometimes hard to get across – because the difference between exports being 1/5 of our GDP, and 1/4 of our GDP, can perhaps seem not very much and pretty abstract.
But it’s reflecting on the fact that exports have hovered around the 20% mark for almost the entire 20 years of devolution. So getting to 25%, and either staying there, or progressing further, will be a big change.
It will also be a beneficial change. It will add more than 2% to the size of our economy, and it would create more than 17,000 jobs.
As a result, it would increase our annual tax take – the money we can reinvest in public services and infrastructure - by an estimated £500 million a year. So the key point here is that the growth plan won’t simply benefit individual exporters – although it will certainly do that – it will also make a difference to jobs, our public services, and their overall quality of life.
The second point flows from that. We see this plan as being important, and because we see it as important we’re backing it with resources. The Scottish Government is devoting £20m of additional funding to supporting the aims and initiatives in this plan.
In the context of our overall budget, that may not seem like very much. But it represents an increase of 1/5 in our overall support for internationalisation.
And because we are working in partnership with business - something I’ll come onto in a moment – that money can, we believe, have a disproportionate impact.
And - as I know Derek Mackay has mentioned - using the analysis that underpins the plan, we are aiming to target that support much more effectively than arguably we have done before.
We are also building on our previous work to raise Scotland’s profile internationally.
And of course as part of that, we will work closely with the UK Government’s Department for International Trade. But we also want to continue to expand our own international presence.
SDI has already increased its presence in Europe – will have additional specialists for countries and sectors which we have identified as priorities. We are trebling the number of trade envoys who can represent Scotland in specific markets.
Our GlobalScot network – potentially a fantastic way of using our diaspora to give better contacts and intelligence to businesses– will grow substantially. We are aiming for that to triple in size in the coming years.
We want to ensure that individual businesses are better supported than they’ve ever been before – and also that Scotland’s international profile is higher than it’s been before.
And as we do all of this – and this is the third point I want to make - we will be working in partnership with businesses – this is a really fundamental point.
We’re acutely aware that the ambitions set out in this plan can’t be delivered by Government alone – it is individual businesses who will be taking the risks, seizing opportunities, developing products and delivering services.
That’s why businesses have already been so instrumental in helping us to put the action plan together – I’m very grateful to everyone in this room who has played a part in the process.
But it’s also why business organisations are taking a leading role in some key initiatives.
The Scottish Chambers of Commerce have been using their contacts to strengthen ties between Scottish and overseas chambers. In the last 15 months or so, I’ve seen the success of those efforts first hand at events in Hong Kong and Berlin. We are continuing to support those efforts.
CBI Scotland have been heavily involved in the export challenge which I launched last November. Amongst other things, it aims to provide intensive support for 50 businesses each year to increase their exports. It will also create 300 new business-to-business mentorships over the next three years.
These mentorships mean that new exporters will be able to learn from established ones, and that established exporters will be able to learn from businesses with even more experience than they have.
And they have been created in direct response to requests from businesses. We really do believe that they will help ambitious companies to expand their horizons and enter new markets.
I think mentorships are maybe a good note to end on. After all, they involve the government, enterprise agencies, business organisations and many individual businesses working together.
And because of that they really do exemplify the co-operation that will be needed to achieve the aims of the export plan.
As I’ve already said, internationalisation matters deeply to our productivity, our jobs and our public services. And so it is – or certainly it should be - a shared national mission.
Today’s plan underlines the Government’s commitment to achieving that mission.
However I hope it also makes clear to everybody in this room and beyond this room, in different capacities and in different ways, that we all have a role to play, all of us can play our part in helping our existing exporters become even more successful, and in encouraging new success stories to come into being.
By doing so, we can ensure that internationalisation is a success story of Scotland’s future, as well as being something we can to continue to be very proud about Scotland’s past and our heritage. And will bring real benefits to businesses and communities across the country.
So I’m very enthusiastic, and the government is very enthusiastic about the launch of this plan today. A lot of work has gone into it and we look forward to working with all of you in the months and years to come - as we raise our ambitions that bit higher and improve our economic performance that bit further; and doing all that to help to make Scotland an even more successful trading nation.