South of Scotland economic review

Scottish Enterprise (SE) commissioned a series of economic reviews focusing on the functional economic geographies of the regions that form SE’s operating area: Aberdeen City and Shire, Dundee City Region, East Region, West Region and South of Scotland. The objectives of the review were to: review economic trends and performance since 1999; assess the potential contribution of each region to the Government Economic Strategy’s (GES’s) targets; and to assess the likely impact of the recession on each region. This report is for the local authority areas of Dumfries and Galloway and the Scottish Borders.

The GES’s seven purpose targets form the basis for assessing progress towards improving Scotland’s economic performance, and provide structure to the review. The review took the following approach: an examination of the global and national economic context; a review of recent economic trends and performance in the region; a comparison of performance with other regions; an assessment of the industrial structure of the region, including representation within key growth sectors; consideration of infrastructure and place issues; and a final economic outlook for the region.

Outputs/findings: The review concludes that: economic growth in the region lagged behind the rest of Scotland and the UK for most of the period 1999-2006; GVA growth rates are predicted to close this gap only a little over the coming decade; recent performance compares more favourably when benchmarked against other predominantly rural areas; GVA per employee is currently well below the Scottish and UK averages; there is evidence to suggest that productivity levels have been falling in recent years, but the region performs better when compared with other rural areas; the employment rate was consistently higher than the Scottish and GB averages between 1999 and 2007, and labour market participation rates are predicted to remain above national averages over the coming decade; before the recession, the region outperformed the Scottish average on key measures of economic inactivity and benefit dependency, although numbers of incapacity benefit claimants were increasing; the region’s population grew by two per cent between 1999 and 2007, compared to Scottish growth of one per cent, and it is predicted that the region’s population will continue to grow at a modest rate over the coming decade; median earnings are below the Scottish average, although the region compares more favourably with other rural areas on this measure; employment is high compared to Scotland as a whole, and the Borders has one of the highest employment rates in the country while Dumfries and Galloway sits broadly in the middle of the spectrum; the region accounts for four per cent of Scotland’s CO2 emissions, and emissions per head are lower than the national average; the impact of the recession is predicted to be slightly more severe in the region than in Scotland as a whole, but less than in the UK as a whole; and economic recovery is predicted to be slower than in both Scotland and the UK.

It was not within the remit of the review to make recommendations.