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GDP Activity
Over the 25 years from 1973, the Scottish economy has been experiencing growth, at an average annual rate of 1.6 per cent per year, while, over the more recent period since 1990, the rate averaged around 2.0 per cent per annum. The average annual rate of growth for the UK economy as a whole since 1973 was around 1.9 per cent (Chart A). While it might be argued that there is therefore little apparent difference in the Scottish and UK growth rates, this seemingly small difference in average annual growth over a 25 year period implies that UK GDP rose by around 8 per cent more than in Scotland.
Chart A: Annual % Change in GDP (excl. oil & gas), Scotland and UK
Sources: Scottish Executive, Office for National Statistics
Total Gross Domestic Product for Scotland is estimated to be £56 billion in 1997. This represents 8.3 per cent of the total UK GDP estimate. Within the total, the most significant industries - manufacturing, transport and communication, finance, business and other services - each showed growth in current prices over the period between 1990 and 1996 (see Table 1.1).
Within the overall growth between 1973 and 1998 of GDP(O) at constant prices, the service sector which now accounts for 63 per cent of Scotland's GDP, saw an average annual growth of 2.2 per cent. This compares to the production and manufacturing sectors' average growth of 1.0 per cent over the same period, and average increases of 1.3 per cent and 0.1 per cent in the agriculture, forestry and fishing and the construction sectors respectively.
In contrast to the steady growth in the services sector, the production and manufacturing growth has been more erratic with very little increase up to the end of the 1980s, but more marked growth of 3.3 per cent per year since 1991. This latter growth has been due almost entirely to the booming electrical and instrument engineering industry which grew by an average 17 per cent per year over this period.
Chart B: GDP by Industry, Scotland 1990-1996
Source: Scottish Executive
The Scottish input-output tables19 allow an estimate of the components of GDP(I) and GDP(E) to be made which are consistent with GDP(O) through the balancing procedures used in this analysis. This is consistent with the methodology now used at the UK level to produce balanced annual National Accounts for the UK.
The input-output balances for Scotland show that income from employment represented 64% of the Scottish GDP(I) estimate of £54 billion. Similarly, consumers expenditure and exports accounted for £19 billion and £45 billion of GDP(E) respectively, while imports and taxes reduced these contributions by a total of £29 billion(Table 1.5).
Demand and Supply
Demand for the output of the Scottish economy can also be examined through the Scottish input-output balances. From the most recent 1996 balances, it is possible to derive the estimate for Scottish gross output of £124 billion, of which £79 billion (64 per cent) was destined for domestic demand (i.e. Scottish industry, consumers, government and capital formation). The remainder was exported from Scotland. For individual industries, the picture was different with energy supply and construction industries selling over 90 per cent of their output within Scotland, but mining and quarrying and manufacturing exporting over 70 per cent of their output from Scotland (Table 1.5, Chart C).
Scottish Industry imported approximately one third of the goods and services it required in 1996, whereas consumers imported almost half of the goods and services they bought. Wages and salaries cost Scottish industry around £34 billion, and accounted for over 25 per cent of the total annual running costs.
Chart C: Share of Output Sold in Scottish Markets, Scotland 1996
Source: Scottish Executive
Growth in consumer expenditure in Scotland has outstripped economic growth, increasing by an average annual rate of 2.6 per cent between 1990 and 1997. In 1996, consumer expenditure was estimated to be almost £40 billion, £19 billion of which was purchases from domestic output (Table 1.5). Using the economic output multipliers derived from the input-output balances (see article in this publication), it is possible to show that consumers supported almost £29 billion of the output of the domestic Scottish economy - 23 per cent - in 1996 (Table 1.7). Exports to the rest of the UK and to the rest of the world supported £35 billion and £31 billion respectively.
Different industries display varying propensities to import the materials required to produce their outputs, and it is possible to estimate the domestic content of exports by each industry by analysing the Scottish input-output tables. The total value of Scottish exports of goods and services was estimated to be £44 billion in 1996 (Table 1.8). When considering the domestic content of Scottish exports, the total value falls to £27 billion. Most strikingly, the electrical and instrument engineering sector represents almost one quarter of total gross Scottish exports, but, when the domestic content is estimated, this sector's contribution reduces to around one sixth (Chart D).
Chart D: Scottish Domestic Content of Exports, 1996
Source: Scottish Executive
Notes:
1. Total exports is defined to be value of sales outwith Scotland.
2. Total domestic content of exports is defined to be value of sales outwith
Scotland less total import content of all imports used in relevant production
processes.
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