Scottish Government

Increase Scotland's Economic Growth Rate

DESCRIPTION:

This measures changes in annual Gross Domestic Product (GDP) growth rate performance in Scotland relative to the UK and the small EU countries.

The growth rates are calculated on a rolling four quarters on four quarters basis.

SOURCE:

Data for Scotland and the UK

GDP figures for Scotland are produced by the Office of the Chief Economic Adviser (OCEA) in the Scottish Government. Scottish GDP is a quarterly National Statistic published on pre-announced dates in January, April, July and October. Further details on Scottish GDP statistics, including methodology notes, are available at: http://www.scotland.gov.uk/gdp

Figures used for comparing GDP performance between Scotland and the UK refer to GDP at basic prices, also known as Gross Value Added (GVA). UK figures are taken from the Office for National Statistics' (ONS) Quarterly National Accounts publication, and the headline CGCE series is used (which includes output from the North Sea oil and gas sector).

Data for Small EU Countries

GDP growth data for the Small EU countries is collected from the Organisation for Economic Cooperation and Development (OECD). The data series used provides GDP volume estimates in constant prices, and fixed Purchasing Power Parities (PPP).

This data is available in the OECD statistics web site and can be found through the following link, http://stats.oecd.org/WBOS/index.aspx.

Rolling Annual (4Q on 4Q) Growth Measure

Quarterly Scottish GDP estimates tend to fluctuate more than UK results because in a smaller economy each sampled unit is more likely to have a noticeable effect on the total. To reduce the quarterly volatility in growth rates and give a true indication of recent trends, a rolling annual measure - which compares the most recent four quarters to the previous four quarters - is used for the purposes of this calculation.

In order to ensure consistency in the measurement of performance against the GDP growth targets annual GDP growth rates for the UK and the Small EU countries are also calculated using the 4 quarters on 4 quarters approach.

Users should be aware that the Scottish Government Quarterly GDP publication and the ONS statistics for the UK report annual growth as being the latest quarter compared to the same quarter in the previous year. Total GDP figures for the UK are also usually given at market prices and not basic prices. The figures used in the Scottish Government National Performance Framework can therefore differ from results reported in other publications.

DEFINITIONS:

Gross Domestic Product (GDP) is a measure of the value added to materials and other inputs in the production of goods and services by resident organisations; before allowing for depreciation or capital consumption. In accordance with UK National Accounting principles, GDP figures for Scotland exclude output from oil and gas extraction from the North Sea. Output from this sector - termed "extra-regio" activity - is not attributed to any one area of the UK. Net receipts from interest, profits and dividends abroad are also excluded.

Headline figures for the UK usually refer to GDP at market prices. Scottish figures measure GDP at basic prices, or Gross Value Added (GVA), which excludes taxes and subsidies on products (e.g. VAT and excise duties) because tax data is difficult to split below UK totals on the timescale required for quarterly results. To ensure consistency, the UK results for GDP at basic prices (series CGCE) are used for comparison.

The small EU countries are defined here as: Austria, Denmark, Finland, Ireland, Luxembourg, Portugal and Sweden. The GDP growth rate for the Small EU is calculated using a weighted approach, whereby the total reflects the relative economic size of each of the seven countries.

BASELINE AND PAST TRENDS:

Performance against the UK

The baseline position is 2007 Quarter 1. Over the 30 year period to 2006, Scotland's average annual GDP growth rate was 2.1%, below the UK average of 2.6%. This resulted in an underlying GDP growth gap of around 0.5 percentage points.

Performance against the Small EU Countries

The baseline is 2007 quarter 1. Over the 30 year period to 2006, Scotland's average annual GDP growth rate was 2.1%, below the Small EU average of 2.8%. This resulted in an underlying GDP growth gap of around 0.7 percentage points.

CRITERIA FOR RECENT CHANGE ARROW:

This evaluation is based on: any difference in the gap in annual growth rates within +/- 0.1 percentage points of the last quarter's figure suggests that the position is more likely to be maintaining than showing any change. A movement of 0.1 percentage points or more in Scotland's favour suggests that the position is improving, whereas a movement of 0.1 percentage points or more in the UK or Small EU's favour suggests that the position is worsening.

For information on general methodological approach, please click here.

FUTURE ISSUES OR REVIEWS:

The GDP series for Scotland is produced using a range of data sources including monthly and quarterly turnover inquiries carried out by the Office for National Statistics; published data sources (e.g. on employment levels or activity levels in certain industries); and data received directly from companies and other organisations. These data sources are in a constant state of development. As a result data sources and methods used in the measurement of GDP and other economic statistics will at times need to be revised.

ASSOCIATED TARGET:

The Government Economic Strategy sets out ambitious targets for Scotland: To raise the GDP growth rate to the UK level by 2011. To match the growth rate of the small independent EU countries by 2017.

Further information can be found at: http://www.scotland.gov.uk/Topics/Economy/EconomicStrategy.