Billion-pound local economy grew steadily amid global turmoil, says new study
Shetland has enjoyed “robust” economic growth of 27 per cent in the last decade, and its billion-pound economy makes a positive contribution of £82 million a year to the UK.
The data is drawn from a newly-published, SIC-commissioned study into the islands’ economy. Conducted by the Hutton Institute and based on 2010-11 figures, the study used information gathered through business and household surveys, as well as from SIC and government sources.
Economic growth in the eight years since the last major economic study was carried out, in 2003, has averaged 3.5 per cent a year. That has come despite a savage global economic downturn from 2008 onwards.
In 2011 the Shetland economy produced £1.09 billion-worth of services. Given the figures pre-date frenzied oil and gas activity it is likely productivity has increased substantially since then.
Household income has grown too, albeit at a slower pace. At £38,148 per annum, income rose by an average of 17 per cent between 2003 and 2011.
MP Alistair Carmichael and MSP Tavish Scott both said the report’s findings reflected the “continued strength” of Shetland’s economy in “difficult times”.
The report does warn that SIC cutbacks of £26 million were likely to shrink the size of the isles’ economy by just over three per cent.
Mr Scott said the “hard decisions” to cut council spending were “bound to have consequences for economic growth”.
“Our local councillors will want to weigh up the speed that they implement the changes so as to get the right balance between balancing the books and stalling economic growth,” he said.
“Shetland is well-placed to meet the economic challenges of the future, but we must never take our eye off the need for fundamentally important public services such as our external transport links, the quality of our schools and how we look after our older people.”
There were lengthy delays in publishing the findings, which trade unions had hoped would be available prior to councillors approving huge spending cuts in February 2012.
At that time unions aired their concerns that the cuts would inflict serious damage on the local economy. But development committee chairman Alastair Cooper has said he thinks developments such as Total’s £500 million gas plant will help minimise the pain.
Two years ago almost 30 per cent of economic output came from various sectors of the seafood industry. Those account for £317 million in all, including £156 million from aquaculture, £83 million from fish processing and £71 million from fishing.
Public spending took care of £248 million, or nearly a quarter, of the economy. That figure included local government spending of £153.2 million, of which £38 million went on schools and £28 million on social work. Just over £56 million went on health, while “public administration” in council and government departments was worth nearly £63 million.
Between 2003 and 2011 public spending as a whole rose by £60 million to account for 22.7 per cent of the economy – compared to 21.5 per cent a decade ago.
Nearly half of the £496 million-worth of exported goods went beyond UK borders. Exports of £166 million went to the rest of Scotland, while a further £118 million of products and services were sent to other parts of the UK.
Imports outweighed exports by £131 million. A total of £365 million imports was made up of £260 million from the rest of Scotland, £363 million from the rest of the UK and £42 million from the rest of the world.
The so-called “exchequer balance” – the different between government revenue and government spending – showed Shetland generated a net surplus of £82 million, up £5 million in today’s prices from the 2003 figure.
Mr Scott claimed those figures made the case “for our islands looking at our own future” irrespective of the outcome of next year’s referendum on Scottish independence.
In a press statement, Mr Cooper said: “This is a tremendous document, covering all sectors of the Shetland economy between 2003 and 2011. This was [a] period of great upheaval in the national and global economies, yet the figures in this report demonstrate robust growth in Shetland.
“The importance of this report is that it includes a wealth of information on every aspect of our economy, from the individual householder up to our most important industries.”
The report will be discussed by councillors at next Wednesday’s development committee.