Scotland’s services exports reach £16bn but Brexit barriers limit growth
Scotland’s international services exports were worth around £16 billion in 2023, but businesses say regulatory barriers are preventing the sector from reaching its full potential.
A new report by the Fraser of Allander Institute and business organisation Prosper found that the value of Scottish services sold overseas has approximately doubled in cash terms since 2008.
Services now account for almost 41 per cent of Scotland’s international exports, compared with around a third in 2008. The research, commissioned by the Scottish Government, examined industries including law, accountancy, architecture, engineering and the performing arts.
Professional, scientific and technical services were the largest category examined, with exports worth £4.6 billion in 2023. Financial and insurance services contributed £2.6 billion, while wholesale, retail and vehicle repair services were worth £2.2 billion.
However, companies told researchers that their ability to expand overseas was being restricted by a range of non-tariff barriers.
These include difficulties securing recognition for professional qualifications, restrictions on short-term business travel and different licensing, certification and regulatory requirements.
The report found that the UK’s departure from the European Union had limited access to the single market for some Scottish companies.
The EU remains the leading destination for Scottish exports in areas including financial services, business services, computing and information technology.
Some fintech companies reported that greater regulatory freedom outside the EU had helped them innovate and compete in other international markets. However, researchers said the overall result had been improved access to markets which were less valuable than the European market.
Some international work previously handled from Scotland is now being coordinated through European Economic Area countries such as Norway and Switzerland.
Professor Mairi Spowage, director of the Fraser of Allander Institute, said Scotland had an internationally competitive base of knowledge and specialist expertise.
She said reducing regulatory friction and helping companies establish trusted relationships in overseas markets would be essential to securing sustained growth.
Sara Thiam, chief executive of Prosper, said services exports deserved greater attention from policymakers. She called for the sector to be given equal priority to goods during trade negotiations and said government support must better reflect the needs of services businesses.
Scottish Government business minister Tom Arthur said the sector supported hundreds of thousands of highly skilled jobs.
He said ministers would study the findings and consider how skills, innovation and export support could help Scottish companies compete internationally.
The full report is expected to be published by the Scottish Government on Thursday 6 August
Scotland’s international services exports were worth around £16 billion in 2023, but businesses say regulatory barriers are preventing the sector from reaching its full potential.
A new report by the Fraser of Allander Institute and business organisation Prosper found that the value of Scottish services sold overseas has approximately doubled in cash terms since 2008.
Services now account for almost 41 per cent of Scotland’s international exports, compared with around a third in 2008. The research, commissioned by the Scottish Government, examined industries including law, accountancy, architecture, engineering and the performing arts.
Professional, scientific and technical services were the largest category examined, with exports worth £4.6 billion in 2023. Financial and insurance services contributed £2.6 billion, while wholesale, retail and vehicle repair services were worth £2.2 billion.
However, companies told researchers that their ability to expand overseas was being restricted by a range of non-tariff barriers.
These include difficulties securing recognition for professional qualifications, restrictions on short-term business travel and different licensing, certification and regulatory requirements.
The report found that the UK’s departure from the European Union had limited access to the single market for some Scottish companies.
The EU remains the leading destination for Scottish exports in areas including financial services, business services, computing and information technology.
Some fintech companies reported that greater regulatory freedom outside the EU had helped them innovate and compete in other international markets. However, researchers said the overall result had been improved access to markets which were less valuable than the European market.
Some international work previously handled from Scotland is now being coordinated through European Economic Area countries such as Norway and Switzerland.
Professor Mairi Spowage, director of the Fraser of Allander Institute, said Scotland had an internationally competitive base of knowledge and specialist expertise.
She said reducing regulatory friction and helping companies establish trusted relationships in overseas markets would be essential to securing sustained growth.
Sara Thiam, chief executive of Prosper, said services exports deserved greater attention from policymakers. She called for the sector to be given equal priority to goods during trade negotiations and said government support must better reflect the needs of services businesses.
Scottish Government business minister Tom Arthur said the sector supported hundreds of thousands of highly skilled jobs.
He said ministers would study the findings and consider how skills, innovation and export support could help Scottish companies compete internationally.
The full report is expected to be published by the Scottish Government on Thursday 6 August