Economy of Scotland

The economy of Scotland is closely linked with the rest of the United Kingdom and the wider European Economic Area, it is essentially a mixed economy. Scotland has the third largest GDP per capita of any region in the United Kingdom after the South East of England and Greater London, though it is still lower than the average of the United Kingdom as a whole.

Scotland was one of the industrial powerhouses of Europe from the time of the Industrial Revolution onwards, being a world leader in manufacturing and shipbuilding related industries, at the time, which today has left a legacy in the diversity of goods and services which the Scottish economy produces from textiles, whisky and shortbread to aeroengines, buses, computer software, ships, avionics and microprocessors to banking, insurance, fund management and other related financial services.

In common with most other advanced industrialised economies, Scotland has seen a decline in the importance of the manufacturing industries and primary-based extractive industries. This has, however, been combined with a rise in the service sector of the economy which is now the largest sector in Scotland, with significant rates of growth over the last decade.

The British Pound Sterling is the official currency of Scotland, and the central bank of the UK is the Bank of England which retains responsibility for the monetary policy of the whole of the United Kingdom.

Overview

After the Industrial Revolution, the Scottish economy concentrated on heavy industry, dominated by the shipbuilding, coal mining and steel industries. Scottish participation in the British Empire also allowed the Scottish economy to export its output throughout the world. However heavy industry declined in the latter part of the 20th century leading to a remarkable shift in the economy of Scotland towards a technology and service sector based economy. The 1980s saw an economic boom in the Silicon Glen corridor between Glasgow and Edinburgh, with many large technology firms relocating to Scotland. Today the industry employs over 41,000 people. Scottish-based companies have strengths in information systems, defence, electronics, instrumentation and semi-conductors. There is also a dynamic and fast growing electronics design and development industry, based around links between the universities and indigenous companies like Wolfson [ [http://www.wolfsonmicro.com/ Wolfson Microelectronics] ] , 4i2i [ [http://www.4i2i.com/ 4i2i Communications] ] , Linn, Nallatech [ [http://www.nallatech.com/ Nallatech] ] and Axeon [ [http://www.axeon.com/ Axeon] ] . There is also a significant presence of global players like National Semiconductor and Motorola. Other major industries include banking and financial services, construction [http://www.homesforscotland.co.uk/docs/ECONOMIC%20VALUE%20OF%20HOUSE%20BUILDING%20INDUSTRY%20NOV%202007.pdf] , education, entertainment, biotechnology, transport equipment, oil and gas, whisky, and tourism. The Gross Domestic Product (GDP) of Scotland was measured at just over £86.3 billion (€126 billion, $170 billion) by the Office for National Statistics in 2005 [http://www.statistics.gov.uk/downloads/theme_compendia/regional_snapshot_2006/SubregionalGVA.xls] , giving a per capita GDP of £16,944 (€24,792, $33,460). Average annual economic growth for 2006 was at 2.2% [ [http://business.scotsman.com/economy.cfm?id=1580632006 Scotsman.com Business ] ] .

Edinburgh is the financial services centre of Scotland and the sixth largest centre in Europe, with many large financial firms based there, including the Royal Bank of Scotland (the second largest bank in Europe and fourth largest globally [ [http://www.forbes.com/lists/2008/18/biz_2000global08_The-Global-2000_Rank.html Forbes.com Global2000] ), HBOS (owners of the Bank of Scotland) and Standard Life Insurance. Glasgow is Scotland's leading seaport and is the fourth largest manufacturing centre in the UK, accounting for well over 60% of Scotland's manufactured exports. Shipbuilding, although significantly diminished from its heights in the early 20th century, is still a large part of the Glasgow economy. The city has the UK's largest and most economically important commerce and retail district after London's West EndFact|date=August 2008. Glasgow is also one of Europe's top 20 financial centres and is home to many of the UK's leading companiesFact|date=August 2008. Other important industries include textile production, chemicals, distilling, brewing and fishing.

Natural Resources

Scotland has a large abundance of natural resources from fertile land, suitable for agriculture, to oil and gas. In terms of mineral resources, Scotland produces coal, zinc, iron, oil shale. The coal seams beneath central Scotland, in particular in Ayrshire and Fife contributed significantly to the industrialisation of Scotland during the 19th century. The mining of coal - once a major employer in Scotland has declined in importance since the latter half of the 20th century, due to cheaper foreign coal and the exhaustion of many seams. The last deep-coal mine continues to operate at Longannet on the Firth of Forth.

Agriculture and forestry

Only about one quarter of the land is under cultivation - mainly in cereals. Barley, wheat and potatoes are grown in eastern parts of Scotland such as Fife and the Scottish Borders. The Tayside and Angus area is a centre of production of soft fruits such as strawberries, raspberries and loganberries, owing to the mild climate. Sheep raising is important in the less arable mountainous regions, such as the northwest of Scotland which are used for rough grazing, due to its geographical isolation, poor climate and acidic soils. Parts of the east of Scotland (areas such as Aberdeenshire, Fife and Angus) are major centres of cereal production and general cropping. In such areas, the land is generally flatter, coastal, and the climate less harsh, and more suited to cultivation. The south-west of Scotland - principally Ayrshire and Dumfries and Galloway - is a centre of dairying. Agriculture, especially cropping in Scotland, is highly mechanised and generally efficient. Farms tend to cover larger areas than their European counterparts. Hill farming is also prominent in the Southern Uplands in the south of Scotland, resulting in the production of wool, Lamb and mutton. Cattle-Rearing particularly in the east and south of Scotland results in the production of large amounts of beef. Farming in Scotland has been particularly hard hit in recent years and is still recovering from the effects of the BSE and the European ban on the importation of British beef from 1996. Dairy and Cattle farmers in south-west Scotland were affected by the 2001 UK Foot and Mouth outbreak, which resulted in the destruction of much of their livestock as part of the biosecurity effort to control the spread of the disease.

Because of the persistence of feudalism and the land enclosures of the 19th century the ownership of most land is concentrated in relatively few hands (some 350 people own about half the land). In 2003, as a result, the Scottish Parliament passed a land reform act that empowered tenant farmers and communities to purchase land even if the landlord did not want to sell.

About 13,340 km² of land in Scotland is forested [http://www.forestry.gov.uk/pdf/fcfs205.pdf/$FILE/fcfs205.pdf] - this represents around 15% of the total land area of Scotland. The majority of forests are in public ownership, with forestry policy being controlled by the Forestry Commission. The biggest plantations and timber resources are to be found in Dumfries and Galloway, Tayside, Argyll and the Scottish Highlands. The economic activities generated by forestry in Scotland include planting and harvesting as well as sawmilling, the production of pulp and paper and the manufacture of higher value goods. Forests, especially those surrounding populated areas in Central Scotland also provide a recreation resource.

Fishing

The waters surrounding Scotland are some of the richest in Europe. Fishing is an economic mainstay in parts of the North East of Scotland and along the west coast, with important fish markets in places such as Aberdeen and Mallaig. Fish and shellfish such as herring, crab, lobster, haddock and cod are landed at ports such as Fraserburgh, Stornoway, Lerwick and Oban. There has been a large scale decrease in employment in the fishing industry within Scotland due to the EU's Common Fisheries Policy, which places restrictions on the total tonnage of catch that can be landed, caused by overfishing in the North Sea and parts of the North Atlantic. In tandem with the decline of sea-fishing, commercial fish farms - especially in salmon, have increased in prominence in the rivers and lochs of the north and west of Scotland. Inland waters are rich in fresh water fish such as salmon and trout.

Oil and gas

With Scottish waters consisting of a [http://www.opsi.gov.uk/si/si1999/99112601.giflarge sector] of the North Atlantic and the North Sea, containing the largest oil resources in the European Union -
Scotland is the EU's largest petroleum producer, with the discovery of North Sea oil transforming the Scottish economy. Oil was discovered in the North Sea in 1966, with the first year of full production taking place in 1976. With the growth of oil exploration during that time, as well as the ancillary industries needed to support it, the city of Aberdeen became centre of the North Sea Oil Industry, which it still is today, with the port and harbour serving many oil fields off shore. Sullom Voe in Shetland is the site of a major oil terminal, where oil is piped in and transferred to tankers. Similarly the Flotta Oil Terminal in Orkney is linked by a 230 km long pipeline to the Piper and Occidental oil fields in the North Sea [ [http://www.undiscoveredscotland.co.uk/flotta/flotta/index.html Flotta - Undiscovered Scotland] ] . Grangemouth is at the centre of Scotland's petrochemicals industry. The oil related industries are a major source of employment and income in these regions. It is estimated that the industry employs around 100,000 workers (or 6% of the working population) of Scotland [ [http://www.scottish-enterprise.com/sedotcom_home/sig/sig-energy/energy-oilandgas/energy-oilandgas-keyfacts.htm Scottish Enterprise - Oil and Gas Key Facts] ] .

Whilst in recent years, North Sea oil production has been in decline, it is estimated that there are reserves of two billion tonnes in the North Sea - as much as has been produced in the last 25 years, with most oil fields being expected to remain economically viable until at least 2020 [ [http://www.scottish-enterprise.com/sedotcom_home/sig/sig-energy/energy-oilandgas/energy-oilandgas-keyfacts.htm?siblingtoggle=1 Scottish Enterprise - Oil and Gas Key Facts ] ] . Recently with the prevailing high oil price, there has been a resurgence in oil exploration, specifically in the North East Atlantic basin to the west of Shetland and the Outer Hebrides, in areas that were previously considered marginal and unprofitable [ [http://www.timesonline.co.uk/article/0,,2090-1938389,00.html Hopes of Western Isles bonanza as Shell starts searching for oil] The Times December 2005] .

Energy

Scotland is endowed with some of the best energy resources in Europe, and is a net exporter of electricity, with a generating capacity of 10.1GW primarily from coal, oil, gas and nuclear generation [ [http://www.scottishdevelopmentinternational.com/pages/KeySectors/Energy/PowerGeneration/index.asp Scottish Development International - Scotland's Energy Sector] ] . With prevailing international concern over the use of fossil fuels in power generation, Scotland has been identified as having significant potential for the development of renewable energy sources, with abundant wave, tidal and wind power. The principal companies operating in the sector are Scottish Power, Scottish and Southern Energy and British Energy.

The Scottish Government has set ambitious targets that 18% of Scotland's electricity generation be derived from renewable sources by 2010, rising to 40% by 2020. Currently renewable energy sources provide Scotland with 13% of its electricity production, with onshore wind generation making the largest contribution, and supporting several thousand jobs. There are many windfarms along the coast and hills, with plans to create one of the world's largest onshore windfarms at Barvas Moor on the Hebridean island of Lewis [ [http://news.nationalgeographic.com/news/2005/10/1031_051031_wind_farm.html Plan for World's Largest Windfarm Generates Controversy] National Geographic October 2005] .

There have also been major developments in harnessing the wave and tidal potential around the Scottish Coast, with the LIMPET (Land Installed Marine Power Energy Transformer) [ [http://www.wavegen.co.uk/what_we_offer_limpet.htm Wavegen] ] energy converter being installed off the island of Islay, which produces power for the national grid. LIMPET, developed in Scotland, is the world's first commercial scale wave-energy device.

Manufacturing

Manufacturing in Scotland has shifted its focus in recent years with heavy industries such as shipbuilding and iron and steel declining in their importance and contribution to the economy. It is generally argued that this has been in response to increasing globalisation and competition from low cost producers across the world, which has eroded Scotland's comparative advantage in such industries over the later half of the 20th century. However, the decline in heavy industry in Scotland has been supplanted with the rise in the manufacture of lighter, less labour intensive products such as optoelectronics, software, chemical products and derivatives as well as life sciences. The Engineering and Defence sectors employ around 30,000 people in Scotland. The principal companies operating in the sector include; BAE Systems, Rolls-Royce, Raytheon, Alexander Dennis, Thales, Selex and Babcock. Not only has the decline of heavy industry, in the last 20 to 30 years, resulted in a sectoral shift of labour, it has led to smaller firms, strengthening links with the academic community and substantial, industry-specific retraining programmes for the workforce.

Whisky

Scotch Whisky is probably the best known of Scotland's manufactured exports contributing around £800 million to the Scottish economy, supporting 41,000 jobs as well as adding £2 billion to the balance of trade making it one of the UK’s top five manufacturing export earners [ [http://www.scotlandoffice.gov.uk/our-communications/release.php?id=3351 Liddell Toasts Success Of Scotch Whisky Industry, Scotland Office January 2003] ] . The Whisky industry also generates a substantial income for the government with around £1.6bn raised in duty each year [ [http://www.beveragedaily.com/news/ng.asp?id=11636-scots-raise-a Scots raise a glass to economy boosting industry] ] . The principal whisky producing areas include Speyside and the island of Islay where there are 8 distilleries providing a major source of employment for the island. In many areas the whisky industry is closely related with tourism, with many distilleries also functioning as tourist attractions.

Electronics

The electronics industry in Scotland Silicon Glen is the phrase that is used to describe the growth and development of Scotland's hi-tech and electronics industries in the Central Belt through the 1980s and 1990s, analogous to the larger concentration of hi-tech industries in Silicon Valley, California. Companies such as IBM (which maintains a plant at Greenock near Glasgow) have been in Scotland since the 1950s being joined in the 1980s by others such as Sun Microsystems at Linlithgow. 45,000 people are employed by electronics and electronics-related firms, accounting for 12% of manufacturing output. Today, Scotland produces 28% of Europe’s PCs; more than seven per cent of the world’s PCs; and 29% of Europe’s notebooks. [ [http://www.scottish-enterprise.com/sedotcom_home/sig/electronics/electronics_key_facts_and_figures.htm?siblingtoggle=1 Key Facts and Figures on the Electronics Industry from Scottish Enterprise] ]

Textiles

Historically textiles were a large employer in Scotland in places such as the Scottish Borders, Shetland and the Outer Hebrides - areas where there is much production of wool. Knitwear and tweed are traditionally seen as cottage industries but names like Pringle have given Scottish knitwear and apparel a presence on the international market. Despite increasing competition from low-cost textile producers in SE Asia and the Indian subcontinent, textiles in Scotland is still a major employer with a workforce of around 22,000. Furthermore the textiles industry is the 7th largest exporter in Scotland accounting for over 3% of all Scottish manufactured products [ [http://www.scottish-enterprise.com/sedotcom_home/sig/textiles/4_15_2_key_facts_and_figures.htm?siblingtoggle=1 Scottish Enterprise - Textile Industry, Facts and Figures] ]

Construction

Scotland builds around 24,000 new homes per year, about 1% of its existing dwelling stock. The home building industry in Scotland directly and indirectly contributed around £5 billion to the Scottish economy in 2006 - that's 6% of GDP and greater than that of higher profile industries such as agriculture, fishing, electronics and tourism. The net value of new building and repairs, maintenance and improvements combined is just under £11.6 billion, which is 14.0% of Scottish GDP in 2006.

The Scottish Government plans to increase the number of new homes built each year to 35,000 by 2015. Communities Scotland, the government agency previously responsible for housing strategy has been replaced, this function now being undertaken by core Government bodies. The 'Right to Buy' has also been ended for new social housing built by councils and housing associations, and a new 'Sustainable Communities Initiative' has been established to encourage local authorities and their partners to plan for and build sustainable new settlements. [ [http://www.homesforscotland.co.uk/pages/layout.asp?did=362 "Facts and figures"] Homes For Scotland. Retrieved 30 March 2008.] [ [http://www.scotland.gov.uk/News/Releases/2007/10/31142057 "Future for housing in Scotland"] Scottish Government press release. Retrieved 30 March 2008.] Eight out of every ten new homes are for private purchase. The industry works in partnership with local authorities and housing associations to provide low cost housing for sale and social housing for rent. McKay Consultants [http://www.homesforscotland.co.uk/docs/ECONOMIC%20VALUE%20OF%20HOUSE%20BUILDING%20INDUSTRY%20NOV%202007.pdf "The Economic Value of the Housebuilding Industry in Scotland"] (November 2007) (pdf) Homes for Scotland. Retrieved 30 March 2008.]

Exports

In 2004, total Scottish exports (excluding intra-UK trade) was provisionally estimated to be £17.5 billion, of which 70% (£12.2 billion) were attributable to manufacturing. The largest export products for Scotland are whisky, electronics, and financial services. [ [http://www.scotland.gov.uk/Resource/Doc/919/0020438.pdf Global Connections Survey] ]

Major Trading Partners

Excluding intra UK trade, the United States and the EU constitute the largest markets for Scotland's exports. As part of the United Kingdom and the European Union, Scotland fully participates in the Single Market and Free Trade Area which exists across all EU member states and regions. Recently with the high rates of growth in many emerging economies of SE Asia such as China, Thailand and Singapore, there has been a drive towards marketing Scottish products and manufactures in these countries, with Singapore entering the top ten markets for Scottish exports in 2004.

ervices

Banking

Edinburgh is Europe's fifth largest financial centre [ [http://www.sgpe.ac.uk/economics/finance.htm www.sgpe.ac.uk/economics/finance.htm] ] , with influential financial players such as the Royal Bank of Scotland , the Bank of Scotland, Scottish Widows and Standard Life all having a presence in the city.

Banking in Scotland has a long history, beginning with the creation of the Bank of Scotland, in Edinburgh, in 1695. Today Scotland is home to 4 clearing banks - the Bank of Scotland, the Royal Bank of Scotland, the Clydesdale Bank and Lloyds TSB Scotland. The Royal Bank of Scotland which is the second largest bank in Europe, fourth largest in the world by market capitalisation and has significant international operations recently opened its new global headquarters in Edinburgh augmenting the city's position as a major financial centre. Many other international banks are beginning to operate bases in Scotland, as the sector expands. In 2005 Scotland ranked second only to London in the European league of headquarters locations of the 30 largest banks in Europe as measured by market value [ [http://www.sfe.org.uk/info/overview_scottish_financial_industry Scottish Financial Enterprise - Financial Industry Overview] ] .

Finance in Scotland also features unique characteristics. Although the Bank of England remains the central bank for the UK Government, three Scottish clearing banks still issue their own banknotes: (the Bank of Scotland, the Royal Bank of Scotland and the Clydesdale Bank). These notes have no status as legal tender; but in practice they are universally accepted throughout the UKFact|date=August 2008 , as well as in the Isle of Man and the Channel Islands. The full range of Scottish bank notes commonly accepted are £5, £10, £20, £50 and £100. (See British banknotes for further discussion).

Centered primarily on the cities of Edinburgh and Glasgow, the development of financial services industry in the Scottish Economy, has taken place over the last 10 to 20 years. The sector makes a significant contribution to the economy employing 5% of the Scottish workforce or 113,160 people and generating £5bn or 6% of Scotland's GDP [ [http://www.scottish-enterprise.com/sedotcom_home/sig/sig-finance/financial_services_key_facts_and_figures.htm?siblingtoggle=1 Scottish Enterprise Financial Statistics] ] . The financial services industry in Scotland is also one of its fastest growing areas with a growth rate of over 35% over the period 2000 to 2005 [ [http://www.sfe.org.uk/info/overview_scottish_financial_industry Scottish Financial Enterprise Industry Overview] ] .

Investment, Insurance and Asset Servicing

Scotland is one of the world's biggest fund management centres with over £300bn worth of assets directly serviced or managed in the country. [ [http://www.sfe.org.uk/info/overview_scottish_financial_industry Overview of the Scottish Financial Industry] ] . Scottish fund management centres have a major presence in areas such as pensions, property funds, investment trusts as well as in retail and private client markets. Similarly asset servicing on behalf of fund managers has become an increasingly important component of the financial services industry in Scotland with Scottish based companies providing expertise in securities servicing, investment accounting, performance measurement, trustee and depositary services and treasury services.

Tourism

It is estimated that tourism accounts for 3% of Scotland's economic output. Scotland is a well-developed tourist destination with attractions ranging from unspoilt countryside, mountains and abundant history. Tourism is responsible for sustaining 200,000 jobs mainly in the service sector, with tourist spending averaging at £4bn per year [ [http://www.scotland.gov.uk/Topics/Tourism Scottish Executive Tourism Statistics] ] . Domestic tourists (those from the United Kingdom) make up the bulk of visitors to Scotland. In 2002, for example, UK visitors made 18.5 million visits to Scotland, staying 64.5 million nights and spending £3.7 billion. In contrast, overseas residents made 1.58 million visits to Scotland, staying 15 million nights and spending £806 million. In terms of overseas visitors, those from the United States made up 24% of visits to Scotland, with the United States being the largest source of overseas visitors, and Germany (9%), France (8%), Canada (7%) and Australia (6%), following behind. [ [http://www.staruk.org.uk//default.asp?ID=659&parentid=469 Statistics on Tourism and Research UK] ]

Infrastructure

"See also: Transport in Scotland"

Infrastructure in Scotland is varied in its provision and its quality. The densest network of roads, railways and motorways is concentrated in the Central Lowlands of the country where around 70% of the population live. The motorway and trunk road network is principally centred on the cities of Edinburgh and Glasgow and connecting them to other major concentrations of population, and is vitally important to the economy of Scotland. Key routes include the M8 motorway, which is one of the busiest and most important major routes in Scotland, with other primary routes such as the A9 connecting the Highlands to the Central Belt, and the A90/M90 connecting Edinburgh and Aberdeen in the east. The M74 and A1, in the west and east of the country, respectively, provide the main road corridors from Scotland to England. The Scottish Executive has stated that it intends to spend £3bn on a capital investment scheme to improve Scotland's road and rail system, over the next decade [ [http://www.transportscotland.gov.uk/ Transport Scotland] www.transportscotland.gov.uk] , with the setting up of a national agency in January 2006 - Transport Scotland to oversee this. Many roads in the Highlands are single track, with passing places.

The rail network is primarily centred on the central belt and is used principally as a means of public transport, with some freight movements - for example from the port facilities at Grangemouth and Hunterston Ore Terminal. After a large rationalisation of routes in the 1960s, which led to station and line closures, the rail network is currently being expanded, to cope with ever increasing levels of passenger demand. The rail-operator First ScotRail operates most routes within Scotland, with long-distance connections to London operated by National Express or Virgin Trains. Proposals which have been mooted include the construction of a high-speed MAGLEV rail system connecting Edinburgh and Glasgow which, it estimated, will cut journey times between the two cities by around 30 minutes [ [http://news.scotsman.com/topics.cfm?tid=139&id=353742006 We can beat the bullet - train chief] The Scotsman March 2006] . Other measures suggested include the electrification of the rail system in order to cut journey times.

In 2004, 22.6 million passengers used Scotland's airports, with their being 514,000 aircraft movements [ [http://www.scotland.gov.uk/Publications/2005/08/25100154/03520 Scottish Transport Statistics] ] with Scottish airports being amongst the fastest growing in the United Kingdom in terms of passenger numbers. Plans have been published by the major airport operator BAA plc to facilitate the expansion of capacity at the major international airports of Glasgow, Edinburgh and Aberdeen, including new terminals and runways to cope with a large forecast rise in passenger use. Prestwick Airport also has large air freight operations and cargo handling facilities. Scotland is well-served by many airlines and has an expanding international route network, with recent long-haul services to Dubai, New York, Atlanta and Canada.

Major deep-water Port facilities exist at Aberdeen, Grangemouth, Greenock, Peterhead, Scapa Flow and Sullom Voe. Scotland is connected to mainland Europe by a dedicated ferry service between Rosyth (near Edinburgh) and Zeebrugge in Belgium. In addition to this many remote island communities on Scotland's western seaboard are served by lifeline ferry services operated by the state-owned company Caledonian MacBrayne, which carry tourists as well as freight and are vital to the economies of these islands.

The Role of the Public Sector

"See also: Politics of Scotland"

The public sector, in Scotland, has a significant impact upon the economy and comprises central government departments, local government, and public corporations. In quarter 3 of 2005, there were 577,300 people employed in the public sector, which accounts for 23.4% of employment in Scotland - this includes all medical professionals employed within the National Health Service in Scotland, those employed in the emergency services and those employed in the state education and higher education sector [ [http://www.scotland.gov.uk/News/Releases/2006/01/13100219 Public Sector Employment in Scotland 2005] Scottish Executive] . This is in addition to employees of the government in the civil service and in local government as well as public bodies and corporations.

There is a clear separation of responsibility of the powers of both the UK government and the devolved Scottish Executive in relation to the formulation and execution of national economic policy as it affects Scotland - this is set out under Section 5 of the Scotland Act 1998.

UK Government

The UK Government along with the Parliament of the United Kingdom retains full control over Scotland's fiscal environment, in relation to taxation (including tax rates and tax collection) and the overall share of central government expenditure apportioned to Scotland, in the form of an annual block grant. It also retains complete responsibility for the operation of the Welfare State, in terms of pensions, unemployment insurance and child benefit - as part of the UK-wide Welfare State exercised by the UK Department for Work and Pensions and HM Treasury.

cottish Government

The Scottish Executive has very limited power to raise or lower the rate of income tax in Scotland by up to 3p in the pound, but has the power to vary business rates and can regulate the application of local taxes such as the council tax levied by local authorities in Scotland. Nevertheless the Scottish Executive has full control over how Scotland's annual block grant is divided between government departments, such as healthcare and education and on state-owned enterprises, such as Scottish Water and Caledonian MacBrayne. The Scottish Executive does however have control over Economic Development policy, and controls, funds and regulates the national Economic development Agency - Scottish Enterprise. In 2006, for example, the budget of the Scottish Executive was around £25bn, [ [http://www.opsi.gov.uk/legislation/scotland/acts2006/asp_20060005_en.pdf Scottish Consolidated Fund, Section 3 of the Budget (Scotland) Act 2006] ] which the Scottish Executive can spend on the areas under its jurisdiction such as education, healthcare, transport, the environment and justice.

Local

The 32 unitary authorities in Scotland have the ability to levy a local tax, called the Council Tax which is used to pay for local services such as refuse collection, street lighting, roads, pavements, public parks and museums. The value of residential property is the base for the tax, with each dwelling allocated to one of eight bands coded by letters A through H (H being the highest) on the basis of its assumed capital value. Each local authority sets a tax rate expressed as the annual levy on a Band D property inhabited by two liable adults. The budget of local authorities is supplemented by direct grants from the Scottish Executive.

Education

Education in Scotland is well-funded with very high levels of participation in all sectors of education. Participation in further and higher education is especially high, with Scottish universities generally being recognised as amongst the best in the teaching of medicine, law, engineering, science and technology. Increasingly Scotland is being seen as an exporter of education, with the number of overseas students applying to studying at universities throughout Scotland, rising substantially in recent years [ [http://www.timesonline.co.uk/article/0,,2090-1849550,00.html Foreign Students Flock to Scotland] The Times October 2005] ] . Most universities are linked with a flourishing research and development sector; the University of Dundee is at the heart of a biotechnology and medical research cluster [ [http://www.dundee.ac.uk/biocentre/ Dundee School of Life Sciences Research] ] ; the University of Edinburgh is a centre of excellence in the field of Artificial Intelligence and the University of Aberdeen is a world-leader in the study of offshore technology in the oil and gas industry [ [http://www.scottish-enterprise.com/sedotcom_home/services-to-the-community/property/aberdeenscienceandenergypark/aotp-areainfo.htm#universities Scottish Enterprise North East Scotland Area Information] ] . Scotland generally has a well-educated population - adult Literacy rates are at over 99%.

Health

Another major component of central government expenditure in Scotland is on healthcare and healthcare related services. The National Health Service (NHS) is the publicly controlled provider of the majority of healthcare in Scotland, with the NHS being a major employer not only in terms of doctors nurses and other key healthcare workers, but also in terms of administration. The service is administered differently from the rest of the United Kingdom and is largely "free at the point of use" to residents in Scotland, except for dental services (where those over 19 must pay) and prescriptions (free to the elderly and subsidised for others). In the short term spending on healthcare in Scotland remains high in response to the nations' poor diet and high instance of heart disease. In the medium to long term, the challenges of an ageing population are likely to increase demand for health services and put increasing pressure on the health service in Scotland.

Other Economic Indicators [ [http://www.scotland.gov.uk/stats/ses/ses-00m.asp Scottish Economic Statistics 2005 - Quick Facts] Scottish Executive] [ [http://www.statistics.gov.uk/pdfdir/gva1206.pdf] ONS Regional Economic Statistics 2006]

Total Population: 5,494,801 (2007 est)

Working Age Population: 2,475,386 (2007 est.)

GDP (£billion): 86.3 (2006)

Manufacturing GVA (£million): 28, 900 (2007)

Number of VAT registered companies: 185,925 (2007 est.)

Number of Large Companies (250+ employees) in Scotland: 2,240 (2007)

Number of new homes built pa.: 24,581 (2006)

Employment Rate (% of adults of working age): 78.7 (2007)

Median Gross Weekly Earnings of full-time workers on adult rates (£): 592.70

Claimant Unemployment Rate (%): 2.1 (2007)

People of working age claiming key Social Security benefits (%): 11.7 (Feb. 2007)

References

* [http://www.scotland.gov.uk/resource/doc/76169/0019773.pdf Scottish Economic Statistics 2005]
* [http://www.scottish-enterprise.com/sedotcom_home/services_to_business_international/lis/aboutscotland/about_scotland-keyfacts/about_scotland-economy.htm?siblingtoggle=1 Scottish Enterprise Statistics]
* [http://www.sfe.org.uk/info/overview_scottish_financial_industry Scottish Financial Enterprise] - Information about Scotland's financial services industry from Scottish Financial Enterprise

ee also

*Economy of the United Kingdom
*Celtic Tiger
*Geography of Scotland
*Economy of Scotland in the High Middle Ages
*Council of Economic Advisers (Scotland)
*Scottish Council for Development and Industry
*Scottish Enterprise
*Scottish independence

External links

* [http://www.scotland.gov.uk/Home Scottish Executive]
* [http://www.scotland.gov.uk/Topics/Statistics Scottish Executive Statistics]
* [http://www.hm-treasury.gov.uk/ HM Treasury]
* [http://www.scottish-enterprise.com/ Scottish Enterprise]
* [http://www.scottishdevelopmentinternational.com/pages/index.asp Scottish Development International (SDI)]
* [http://business.scotsman.com/topics.cfm?tid=216 Scotland's Economy - The Scotsman]