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WEST LOTHIAN
TURNING CHALLENGES INTO
OPPORTUNITIES
ECONOMIC CONFERENCE AND LIVINGSTON LECTURE 2009
Welcome
Mhairi Laughlin
Principal and Chief Executive, West Lothian College
Launching the West Lothian
Economic Review 2009
Dave McDougall
Chief Executive, West Lothian Chamber of Commerce
Economic Forecast
Professor Donald MacRae
Chief Economist, Lloyds TSB Scotland,
West Lothian Economic Conference 2009
“Turning Challenges into Opportunities”
Scotland – Roaring through the Recession?
Donald J.R. MacRae
Howden Park Centre
Livingston
28th April 2009
West Lothian Economic Conference 2009
“Turning Challenges into Opportunities”
Scotland – Roaring through the Recession?
Donald J.R. MacRae
Howden Park Centre
Livingston
28th April 2009
UK and Scottish GDP Underlying Annual Change
% underlying annual change
3.8 3.9 3.8
3.5
3.5
3.1
3.0
2.6
2.2
2.2
2.3
2.5
2.7
2.8
UK
3.0 3.1 3.0
2.7
2.6
2.3
1.9 1.9 1.9
2.4
2.8 2.8 2.8 2.9 3.0
2.9
2.6
2.7
2.2 2.1 2.2
2.0
0.7
4
‘99
1
2
3
‘00
4
1
2
3
‘01
4
1
2
‘02
3
4
1
2
3
‘03
4
1
2
3
4
’04
Quarter Year
Source: Scottish Government (2009).
1
2
3
’05
4
1
2
3
’06
4
1
2
3
’07
4
1
2
3
‘08
4
UK and Scottish GDP Underlying Annual Change
% underlying annual change
3.8 3.9 3.8
3.5
3.5
3.1
3.0
2.6
2.8
3.0
2.2
2.7 2.7
2.3
2.5
2.2
2.3
2.5
1.9 1.9 1.9
2.4 2.3
‘99
‘00
4
1
2
3
‘01
4
1
2.7 2.7 2.6
2.3
2.2
2.4
2.2 2.1 2.2
2.6
2.8 2.8 2.8 2.9 3.0
2.7
2.7 2.7
2.0
2.6
2.4
2.3
2.1 2.1
2.2
1.9 1.8
1.8
‘02
3
1.4
Scotland
1.0
2
2.9
2.6
1.6
0.7
0.5
0.6
4
1
2
3
‘03
4
1
2
3
4
’04
Quarter Year
Source: Scottish Government (2009).
2.6
1.8
0.7
3
2.7
2.2
1.0
2
UK
3.0 3.1 3.0
2.5
1.6
1
2.8
2.3
2.0
4
2.7
1
2
3
’05
4
1
2
3
’06
4
1
2
3
’07
4
1
2
3
‘08
4
UK and Scottish GDP Underlying Annual Change
% underlying annual change
3.8 3.9 3.8
3.5
3.5
3.1
3.0
2.6
2.8
3.0
2.2
2.7 2.7
2.3
2.5
2.2
2.3
2.5
2.7
2.8
UK
3.0 3.1 3.0
2.7
2.6
2.3
1.9 1.9 1.9
2.5
2.4 2.3
2.7 2.7 2.6
2.3
2.2
2.0
2.2
2.4
2.2 2.1 2.2
2.6
2.8 2.8 2.8 2.9 3.0
2.7
2.7 2.7
2.0
2.6
2.4
2.3
2.1 2.1
2.2
1.9 1.8
1.8
1.8
1.6
1.6
1.0
1.4
Scotland
1.0
0.7
2.9
2.6
0.7
0.5
0.6
-2.6
-3.5
4
‘99
1
2
3
‘00
4
1
2
‘01
3
4
1
2
‘02
3
4
1
2
3
‘03
4
1
2
3
4
’04
Quarter Year
Source: Scottish Government (2009), Fraser of Allander Institute (2009), H.M. Treasury (2009).
1
2
3
’05
4
1
2
3
’06
4
1
2
3
’07
4
1
2
3
‘08
4
’09
forecast
Sectoral Growth Trends - Scotland
% real output growth
Decrease
Increase
GDP
Construction
Business Services & Finance
Manufacturing
Government & Other Services
Distribution, Hotels & Catering
Transport, Storage & Comms.
Source: Scottish Government (2009).
0.5
Year to Q4, 2008
-1.7
-1.0
-0.7
1.3
2.8
3.4
Sectoral Growth Trends - Scotland
% real output growth
Decrease
Increase
GDP
0.5
-1.7
Year to Q4, 2008
Construction
-4.7
-1.7
Business Services & Finance
Quarter 4, 2008
-1.0
-0.7
Manufacturing
-0.7
-4.6
Government & Other Services
Distribution, Hotels & Catering
Transport, Storage & Comms.
Source: Scottish Government (2009).
-0.3
-1.5
-2.0
1.3
2.8
3.4
UK Households’ balance sheets set to strengthen as the savings ratio rises
Source: Lloyds TSB Corporate Markets Economic Research (2009).
Quarterly All Scotland Average House Price
Q4, 2008
£158,820
Index Q1 1996 = 100
Quarterly price change
-2.3%
Underlying annual price change
316
300
+1.6%
305
318
312
322
310
303
282
273
261
265
253
241
245
234
222
215
207
187 190
179
159 160
Q1, 1996
£51,419
100 98
103
99 100 101 100
166
147
116 116 115
112 114
108 109 109 106 108
127
123 125 122 124
130
138
134 137
1234123412341234123412341234123412341234123412341234
96
97
98
99
00
01
02
03
04
05
06
07
08
Source: Lloyds TSB Scotland Scottish House Price Monitor February 2009.
Loans for House Purchase - Scotland
140
No. of loans
(thousands)
130
127 124
120
104
100
88
80
74
86
70
66
74
70
79
85
44 41 44
84
70
66
62
59
55 54
60
40
90
90
84
75
103105101
-40%
61
59
47
32
20
0
74
75
76
77
79
80
81
82
83
84
85
86
87
88
89
90
91
92
Year
Source: CML (2009).
93
94
95
96
97
98
99
'00 '01 '02 '03 '04 '05 '06 '07 '08
Consumer Optimism for next Twelve Months
per cent of those
responding
positively
35
34
30
31
28
31
28
27
25
25
23 24
21
32 33
30
28
26 26 25 26
24
23
26 25
20
28 27
22 23 23
21
16
1
-7
-10 -9
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1
‘00
‘01
‘02
‘03
‘04
’05
Quarter Year
Source: Experian Business Strategies Ltd (2009).
’06
’07
’08
‘09
New Car Sales in Scotland
March sales down 23%, (UK 30%) year on year
No. of sales
September sales down 26%, year on year
40,720
40,163
39,218
31,428
29,014
19,682
14,938
13,575
13,789
13,611
11,313
16,054
14,008 13,861
12,708
11,914
11,091
10,705
10,190
7,829 7,442
5,813
4,902
Jan Feb
4,578
4,341
Mar
Apr
2007
Source: SMTA (2009).
May Jun
Jul
Aug Sep
Oct
Nov Dec
Jan
Feb Mar
2008
8,573
Apr
May Jun
Jul
Aug Sep Oct
3,897
Nov Dec
Jan
Feb Mar
2009
2005
2006
Source: Univ. of Edinburgh & Scottish Retail Consortium (2009).
2007
2008
Mar
Feb
Jan
Dec
Nov
2.8
3.4
2.7
4.2
5.3
4.9
4.5
4.8
6.6
6.5
6.6
7.1
7.1
7.2
7.0
7.3
7.3
6.9
6.8
6.6
6.2
6.0
5.6
5.5
5.5
5.3
4.9
Oct
4.1
4.6
2.1
2.3
4.4
4.0
3.8
3.6
4.4
Sept
Aug
July
June
May
Apr
Mar
Feb
Jan
Dec
Nov
Oct
Sept
Aug
July
June
May
Apr
Mar
Feb
Jan
Dec
Nov
Oct
Sept
Aug
July
June
May
Apr
Mar
Feb
Jan
Dec
Nov
Oct
Sept
Aug
July
Jun
May
Apr
Mar
Feb
Jan
8.6
7.8
8.0
8.1
8.3
8.5
8.2
8.2
7.8
8.0
9.4
9.2
9.4
9.7
9.6
Scottish Retail Sales - Annual Percentage Growth
2009
Scottish Unemployment Rate
Claimant Count
10
Rate (%)
9
8
March 2009
Scotland = 4.3%
(UK
= 4.5%)
(provisional)
7
6
5
4
3
2
Source: National Statistics: The Labour Force Survey, April 2009.
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
0
1995
1
Source: Bell, D. (2009).
30
Dundee City
41
48
52
53
East Ayrshire
Angus
Local Authority
57
66 67
East Lothian
Stirling
West
Lothian
Perth & Kinross
Scottish Borders
Falkirk
70
Clackmannanshire
South Lanarkshire
North Lanarkshire
66
Highland
62 63
68
Midlothian
Scotland
West Lothian
Per cent increase
Eilean Siar
East Renfrewshire
South Ayrshire
Dumfries & Galloway
50 51
E Dunbartonshire
Aberdeenshire
48 48
W Dunbartonshire
45 47
Scotland
Orkney Islands
45
Fife
43
Argyll & Bute
Renfrewshire
40
Edinburgh, City of
35
North Ayrshire
Moray
30
Aberdeen City
27
Glasgow City
15
26
Inverclyde
Shetland Islands
Claimant Count per cent increase April ’08 to January ‘09
97
81 81
86 87
74
Annual Growth Rate of M4 Lending (UK)
Seasonally adjusted
22
Annual Growth
Rate %
20
Household Sector
18
Private Non-financial Corporations
16
14
12
10
8
6
4
2
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
2007
Source: Bank of England Statistical Releases (2008 & 2009).
2008
2009
Credit Facilities
“How has the availability of credit provided to the corporate sector overall changed?”
(% reporting increase minus % reporting decrease)
Actual
Expectations
26%
8%
2%
-13%
-20%
-37%
-32%
-36%
-28%
-52%
June
2007
Sept
Dec
March
June
2008
Source: Bank of England (2009). Credit Conditions Survey 2009 Q1
Sept
Dec
March
Dec
March
2009
2008
2009
Turnover – Response to the question posed in
LTSBS Scottish Business Monitor
“What was the trend in your turnover in the last three months to end of February 2009?”
(% reporting increase minus % reporting decrease)
Actual
34%
Expectations
28%
16%
8%
11%
-10%
-22%
-28%
-31%
-40%
Q2 07
Q3 07
Q4 07
Q1 08
Source: Lloyds TSB Scotland Business Monitor Q1 2009.
Q2 08
Q3 08
Q4 08
Q1 09
Expected in next 6 months
to May ’09 to Aug ‘09
Scottish Economy in 2009
•
GDP falls by ~2.6%
•
Claimant unemployment rises
•
Borrowing costs remain low
•
Growth resumes in 2010
•
Pressure on credit eases
Strengths:
Weaknesses:
•
No car manufacturing
•
Number of businesses
•
Relatively low unemployment
•
Pressure on government spending
•
Renewables
•
Need for fiscal devolution/autonomy.
•
Energy, food & drink.
GDP per Capita - Current PPPs
Index: OECD = 100
high income
group over 120
260
high middle income group
101-120
low middle income group
51-100
low income
group 0-50
240
220
200
180
160
140
120
100
80
60
40
Note: Scotland estimated at 95.5% of UK.
Source: OECD (2008), BERR: Regional Competitiveness & State of the Regions (May 2008).
Turkey
Mexico
Poland
Slovak Republic
Hungary
Portugal
Czech Republic
Korea
New Zealand
Greece
Spain
Italy
OECD
France
Japan
SCOTLAND
Germany
Finland
UK
Sweden
Belgium
Australia
Denmark
Austria
Netherlands
Canada
Switzerland
Iceland
Eire
USA
Norway
0
Luxembourg
20
How Scotland Compares
Total entrepreneurial activity, 2004-2006 average
(% working age population)
%
14
12
10
8
6
4
Source: Scottish Enterprise. (2008) after Levie.
Portugal
Japan
Poland
Belgium
Sweden
Mexico
Hungary
Italy
Germany
Finland
Netherlands
Scotland
Denmark
France
Spain
UK
Greece
Iceland
Ireland
Norway
Canada
USA
Australia
0
N Zealand
2
Small EU Nations – Firms with between 20 and 49 Employees
Small EU=100
200
185
150
137
111
109
96
100
85
76
67
50
0
Luxembourg
Source: Scottish Enterprise (2008).
Denmark
Portugal
Austria
Ireland
Sweden
Finland
Scotland
Scotland – Reasons to Roar
•
Population increasing
•
Energy – Scotland has 25% of Europe’s renewable resource in
• tidal
• wave
• wind
•
Oil and gas
•
Government spending
•
Life sciences – growing.
A private sector view of the economy
– Challenges and Opportunities
John Anderson
Chief Executive, The Entrepreneurial Exchange
Turning Challenges into
Opportunities
Chris van der Kuyl
Chief Executive, brightsolid Limited
Any questions?
Vote of Thanks
Councillor Martyn Day
Executive Councillor Development & Transport,
West Lothian Council
West Lothian Economic Partnership
thanks everyone who has helped make
this conference a success