Performance of high growth firms in Scotland

This paper summarises new data on high growth firms (HGFs) in Scotland, and compares performance to other UK regions in high growth performance. The analysis considered the proportion of the business base that achieves high growth, characteristics of HGFs in terms of size and productivity, and the pattern of high growth across local authority areas.

The analysis was based on a HGF dataset published by the Office for National Statistics (ONS), which provides data on the number of HGFs by UK Government Region and local authority areas from 2013 to 2016, providing four years of trend data.

Key findings from the analysis included that: Scotland’s HGF rate lags most and in some cases all UK regions, which has been the case for most years over 2013-16; and Scotland’s HGFs tend to be smaller than those in most other UK regions, and have lower levels of productivity. This suggests that HGFs in Scotland play a far less significant role in boosting economic and productivity growth than those in other UK regions. The report highlights that it is not possible to explain why Scotland’s HGF rates lag all other UK regions from the ONS data alone. However, it is suggested that other data and research does show that Scotland performs less well than many other UK regions on key drivers of business growth, such as innovation, investment in R&D and exporting. Scotland also has a lower business density than nearly all other UK regions, which may reduce competitive pressures and business growth dynamism.

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