It’s the economy, sage
“UK economic growth best since 2007” screamed
the headlines amid claims in Westminster that government policy was
working. However, the yearly growth was
only 1.9%, which is less than the rate of inflation despite it falling back to
the Bank of England’s 2% target. So this
positive news just shows how little growth there has been since the recession
and of course from a reduced base.
The figures
bring hope for the economy and greater confidence from businesses. However, there
is still time for a downturn and it is crucial that government policy doesn’t extinguish
the flickers of growth.
In Scotland,
economic policy has gone high brow, looking to recoup some reward from
investment in university research and in particular it has tried to target
specific sectors. Despite this policy which has spanned governments and years,
industrial spend on research sits stubbornly around 0.6% of GDP, half of that
of the UK and much less than South East of England and many of our competitor
nations. So the indicators suggest this
policy is not producing results.
A study
commissioned by Nesta, stated that government policy is concentrating too much
on start-ups and technological firms to the detriment of more traditional firms
with higher growth. However, most commentators defended the current policy with
one exception. The FSB argued that we should
invest in existing businesses and in particular, not try to pick and choose
growth sectors. Ironically it was Nesta
who had previously pointed to the success of Finland in precisely targeting not
only economic funding but also research. The Finnish government took a long term and cross
party decision to pursue future growth industries in a limited number of
sectors. This certainly paid off, though
recent failings are more due to company inertia rather than the policy.
So is this an
investment in the future or naive in attempting to turn Scots into inventors
and entrepreneurs?
Well I believe
a strong economy is based on exploiting our research capability and the drive
of high growth tech companies but many are now questioning that policy. So how do we increase business R&D spend? How do we develop our world class research? How do we get our academics to talk to business?
Well the
time is ripe to develop policy as the referendum debate considers what a
Scottish economy will look like. The Scottish
Parliament Economy committee has two ongoing enquires with written submissions
due at the end of the month. One of
those is esoteric in considering the future of the economy post-2014. The other on the National Planning Framework,
is more pragmatic but will be crucial in the future development of new energy
sources.
As a
(former) scientist I believe that we should do more to exploit the world class
university research in Scotland and influence politicians. If tech companies are to continue to develop
and grow in Scotland, we need to wise about the economy by making sure it’s the
sage that is heard in policy development.
So think
about making a contribution, not matter how brief but be quick, you have until
the end of January.
Tony Axon
Director
