Scottish enterprise publishes new economic research and intelligence

Account managed companies review

This recent research helps us understand how the companies we work with most closely are responding to the economic challenges. This research summarises feedback from 238 Scottish Enterprise (SE) Account Managed companies from the period October to December 2011. Account Managed companies are those we work with most intensively and which we believe can significantly contribute to Scotland’s economic growth. These companies tend to be globally ambitious, have strong leadership and be opportunity driven – so in many cases are experiencing stronger growth than the wider company base.

Key findings:

• Two thirds of account managed companies reported an increase in turnover over the previous six months
• Almost half reported an increased in operating profits and almost 45 per cent an increase in employment
• A comparatively small proportion of account managed firms indicated a reduction in turnover, operating profits and employment
• Over 60 per cent of account managed firms expect turnover to increase over the next six months - but fewer than half anticipate an increase in operating profits over the same period
• Exporting firms are usually positive about their immediate export prospects, with over half anticipating an increase over the next six months compared to only 6 per cent expecting a decreaseA quarter of exporting firms in the October to December data collection period indicated that they had entered new export markets in the previous six months
• Read the report summary here

Account managed companies – sector performance

This report details the performance of account managed companies by sector from the period November 2010 to October 2011 as a result of 1264 individual company reviews.

Key findings:

• The proportion of firms reporting growth as opposed to a decrease in turnover is greatest in sectors such as textiles, food and drink, financial services and energy
• The picture is less positive in sectors such as tourism, aerospace, defence and marine and construction
• Fewer firms achieved increases in operating profits than achieved increases in turnover, suggesting some reduction in margins. Sectors most likely to achieve operating profits growth were financial services, textiles and energy
• Sectors most likely to have reported increases in employee numbers were energy, textiles and life sciences industries
• Summary of the report here

Data Matching and Performance of Businesses supported by Scottish Enterprise/Highlands and Islands Enterprise

Scottish Enterprise is constantly assessing the economic benefits of the support we provide to companies. This independent study has analysed government data on business performance and compared the performance of account managed and non-account managed companies.

• Scottish Enterprise works with companies that employ around 363,000 people and generate turnover of around £80 billion per annum
• Productivity growth and productivity levels are higher in the account managed companies
• A higher proportion of the account managed companies are growing than in the rest of the economy
• Read a summary and the full evaluation here

Note: This is the first stage in a longer research exercise and further, more in depth analysis of the data is planned, along with an evaluation survey of our account managed companies. This will enable us to estimate how much of this growth is as a result of support and to better understand how this support drives improved performance.

Global Connections Survey

The ninth Global Connections Survey shows Scottish exports increasing by an estimated value of £355m to £22bn in 2010. Other highlights included:

• The top five exporting industries in 2010 – which accounted for around 60 per cent of total exports – were food and beverages (£4bn), chemicals (£3bn), business services (£2.5bn), electrical and instrument engineering (£1.9bn) and the mechanical engineering sector (£1.6bn)
• The USA remains Scotland’s leading export destination with an estimated £3.5billion of exports in 2010, an increase of £365milion since 2009. This is followed by Netherlands (£2.4bn), France (£1.5bn) and Germany (£1.3bn)
• Exports to the rest of the UK in 2010 are estimated at £44.9bn with £24bn attributable to service sector companies and £13bn to manufacturing sector companies
• See the full results here.

Market intelligence reports

SE’s market intelligence reports give an insight into sectors where Scotland has been identified as having a globally competitive advantage.

Life Sciences

• Scotland is home to the UK’s second largest life sciences cluster, and one of the most sizeable in Europe
• The sector contributes £1.4 billion to the Scottish economy
• The two largest subsectors are medical technologies (which includes diagnostics) and pharmaceutical services
• Scotland is home to over 140 medical technology companies which collectively generate around a third of the life sciences sector turnover
• Read the full report here

Financial Services

• Scotland’s financial services sector contributes £7bilion to Scotland’s GVA
• The financial services industry is a significant source of employment in Scotland – with nearly 95,00 people directly employed in the sector
• Scotland’s insurance sector has a 23 per cent share of all employment in the sector across the UK
• Graduates account for 35 per cent of the workforce in Scotland’s financial services industry
• Scotland’s investment management sector manages assets of £750 billion
• Read the full report here

Quarterly Results (Q3 October to December 2011):

Regional Selective Assistance (RSA):

• Over 1000 jobs are to be created or safeguarded thanks to over £12 million of RSA funding. RSA grants were accepted by 20 businesses between October and December 2011. The funding will support planned investment of over £62.8 million, creating and safeguarding 1007 jobs.
• The single largest award of £5.2 million was made to Michelin Tyres plc in Dundee, followed by a £2 million award for Stirling-based Superglass Insulation Limited
• Further details here

Scottish Investment Bank:

• The Scottish Investment Bank (SIB) invested a total of £7.6 million in 36 deals between 30th September 2011 and 30th December 2011, leveraging £20 million of additional investment from the private sector.
• This included support from SIB's Scottish Venture Fund (SVF) which invested in Edinburgh-based life sciences company NuCana BioMed Ltd. The SVF investment was part of a £6.7 million Series A funding round .The deal was led by Sofinnova Partners with Morningside Ventures and Alida Capital International investing alongside the SVF.

Economic Update

• There are continuing concerns about the prospects for the global economy. The IMF has downgraded its 2012 economic growth forecasts for most of the world’s largest economies, with only the US prospects unchanged for 2012. It also warns that the eurozone, Scotland’s main overseas exports destination, is likely to enter into a mild recession this year.
• The US economic recovery is strengthening with recent data releases showing positive signs of growth. US GDP growth for Q4 2011 was 2.8% ( at an annualised rate), up from 1.8% in Q3.
• Emerging economies although still growing strongly are now being affected by the ongoing economic problems in key western markets. In China, business surveys show weakening manufacturing output and a fall in demand for Chinese exports.
• The UK is the largest market for Scottish company sales, preliminary estimates of GDP growth for Q4 indicate a contraction of 0.2%. For 2011 as a whole the economy grew by 0.9%, less than half of the 2.1% growth in 2010.
• Looking forward, independent forecast for the UK are generally pessimistic. The IMF has cut back sharply its UK growth forecast to just 0.6% in 2012 and 2.0% in 2013. The National Institute of Economic and Social Research predicts that the UK economy will grow by just 0.1% in 2012 but by a stronger 2.3% in 2013, however the latter will be dependent on the eurozone debt crisis being resolved.
• The Bank of England has announced that it will extent its quantitative easing programme by £50 billion to give a further boost to the UK economy, taking QE to a total amount of £325 billion.
• The latest results for the Purchasing Managers’ Index business survey were relatively positive and indicated growth in both the UK manufacturing and service sector in January.
• Scottish GDP figures for Q3 2011 indicated growth of 0.5%, matching the UK rate for the quarter. Over the quarter service sector output grew by 0.3%, driven by a recovery in the business and finance services, with manufacturing up 0.9%.
• The Bank of Scotland PMI survey for January indicated modest growth for the Scottish private sector economy in January. Growth was driven by a rise in service sector activity, with manufacturing activity falling marginally. Other business surveys indicate slowing economic activity in the last quarter of 2011 with business confidence for 2012 being affected by a weak domestic economy and concerns over conditions in the eurozone.
• The Index of Manufactured Exports for Scotland showed growth of 0.2% in Q3 2011, the third consecutive quarter of growth.
• Unemployment in Scotland rose by 16,000 to reach a total of 231,000 in the three months from October to December. The Scottish unemployment rate is now 8.6%, higher the UK average of 8.4%.