Scottish businesses have been investing more over the past year but exports have fallen and productivity shows no sign of improving, according to an annual index.
Business investment in Scotland has risen to 10% of GDP, its highest level in 20 years, but exports dropped sharply to over 20% of output, widening the gap with the UK average (31%).
Early-stage entrepreneurship remains the lowest among UK nations at 9%, significantly below the UK at almost 11%.
Ahead of January’s Scottish Budget and the Holyrood elections in May, the sixth annual CBI–Addleshaw Goddard Scottish Productivity Index, compiled by the Fraser of Allander Institute, shows progress in business investment, patenting activity, educational attainment, internet speeds, and the expansion of EV charging infrastructure.
But it also highlights persistent and structural challenges – especially in exports, entrepreneurship, workforce training, and long-term health outcomes – that continue to constrain Scotland’s productivity and economic potential.
CBI Scotland is launching its business manifesto in January, ahead of the Scottish Parliament elections – which will outline plans to help solve long term economic inactivity, how to upskill the workforce and keeping the momentum on business investment – all to drive productivity and growth in all sectors of the Scottish economy.
Michelle Ferguson, director, CBI Scotland, said: “This year’s Index shows that Scotland is not standing still – firms are investing more, digital infrastructure is improving, and we are building on real strengths in education and innovation.
“But it also underlines that these gains are not yet translating into the step change in productivity our economy needs.
“Too many businesses are still held back by weak export performance, falling levels of workforce training and the growing impact of long-term ill health on participation in the labour market.
“With a Budget in January and elections to Holyrood next year, firms will be looking to the Scottish Government for decisive moves on tackling economic inactivity, addressing challenges around skills and training as well as boosting exports.
“If we want higher growth, better wages and improved living standards, we need a plan of action which delivers. Scotland has all the ingredients for success; a highly educated workforce and strong business investment – the task now is to bring them together at pace and at scale.”
Deputy First Minister Kate Forbes said: “This report captures important measures that contribute to whole-economy productivity.
“Despite challenging economic headwinds, since 2007 Scotland’s productivity has grown at an average rate of 0.9% per year compared to the UK average of 0.3%.
“I am encouraged to see business investment reaching its highest level in 20 years, showing that industry recognises Scotland’s real strengths – one of the UK’s most highly educated workforces, globally significant energy assets, and improving digital and green infrastructure.
“The Scottish Government is driving a new national and regional approach to skills planning and our Programme for Government provides certainty for businesses to scale and grow by supporting entrepreneurs, boosting planning capacity and reducing regulatory complexity and costs.”
#Higher #investment #fails #deliver #productivity #gains #Daily #Business