The Scottish Government says it has a real battle on its hands to ensure Brexit does not derail Scotland’s strong economic growth.

The comments came as the Government unveiled its Economic Action Plan this morning at the headquarters of tech consultancy firm Mudano in Edinburgh.

The plan follows the recent publication of the State of the Economy Report, which highlighted that Scotland’s economy continued to strengthen in the first half of 2018, with annual GDP growth the strongest since 2014 and above the UK as a whole. It also showed that the labour market continues to perform strongly with unemployment falling over the past year and remaining close to its record level.

As part of a response to the business-led Enterprise and Skills Strategic Board, the Economic Action Plan sets out a number of new and existing actions that could help build a strong, vibrant and diverse economy that promotes wellbeing and attracts investment.

Highly skilled workforce

The Government acknowledged that an unprecedented rate of technological change is driving change in the workplace. That, it said, is why it is investing to provide a highly skilled workforce through education, training and re-skilling.

Launching the plan, Economy and Finance Secretary Derek Mackay, said: “Scotland is an affordable place to do business. You get the quality as well from a highly educated workforce.

“Other countries might choose ‘race to the bottom’ but, for Scotland, it’s about that quality, that skills base, the availability of people and continued investment in innovation – the technologies of the future, be it digital or life sciences. There are great opportunities here, which then takes us to the threat.”

The biggest economic threat to Scotland is Brexit, Mackay explained. And, due to this, Scotland’s positive economic growth is now threatened, he added.

“Economic consensus is that Brexit is a major threat to GDP, to employment and, of course, the UK Government’s approach to people and immigration is a challenge for Scotland’s economy as well,” Mackay said.

“The circumstances of Scotland are different from South East England. Our economic success is partly down to people, and the growth of the number of people we have in Scotland. That has to come through the positive migration of people who contribute to our economy.”

Brexit has sharpened the focus on what needs to be done to support the economy, according to Mackay.

“It’s certainly sharpened the Scottish Government’s focus on what we need to do in the face of these headwinds, whereas the Tories are still marching their troops over a cliff edge right now. It’s a kamikaze approach from UK Government in terms of Brexit negotiations and the uncertainty they’re creating compared to us trying to get on with getting the least damaging outcome for Scotland.

“That includes single market access and a customs union, short of EU membership which is how Scotland voted. No matter what, my focus is to support the economy, work with the business community, work with industry, work with education and local authorities, and trade unions, to try to support the economy and accelerate the projects we know and believe are working.

“Brexit has presented us with a massive challenge, but never let a good crisis go to waste. I’m not saying we’re in crisis but we’re doing our best to get through these difficult, uncertain times.”

Some of the new measures in the Economic Action Plan include:
• Committing to maintain a stable and competitive tax regime as part of a supportive business environment.
• Establishing a £18 million Advanced Manufacturing Challenge Fund to ensure all parts of Scotland benefit from developments in advanced manufacturing.
• Responding to the rapidly changing skills needs of business and employees by enhancing our support for reskilling and upskilling.
• Working with business to pilot two ‘Productivity Clubs’ to support businesses to help each other to improve managerial capability and diffusion of technology and innovation
• Expanding the role of the Can Do Business Innovation Forum to take action on the economic opportunities and challenges of new technologies.
• Launching a ‘Come to Scotland campaign’ to attract talent and investment and help mitigate the impact of Brexit.

The Economic Action Plan was presented at the Edinburgh office of London-headquartered consultancy company, Mudano, which this week announced it is making a £6.9 million investment to establish an artificial intelligence R&D base in Edinburgh.