The Committee that got it seriously wrong

Remember the report by the Enterprise and Culture Committee which suggested an annual shortfall of £8.5 billion in Scottish capital investment? More details here.

The Executive has now published its response. Here is an extract:

"The Committee's estimate that £8.5 billion in extra annual investment is required is derived from its assertion that "Scotland invests less than 10% of its GDP" and that "high-growth economies, on the other hand, invest between 18 and 20% of GDP each year". By estimating Scottish output at £85 billion per year the Committee calculated that a doubling of investment from ten to twenty per cent of GDP would require around £8.5 billion a year in extra investment. This calculation is flawed.
In fact, the latest data (for 2000) show that investment in Scotland was £13.6 billion or 20.3% of GDP. This was marginally higher than the comparable figure for the UK of 19.1% of GDP. Wider international comparisons are complicated by the use of a slightly different measure of GDP by the OECD, but in the same year the US invested 19.9% of its GDP, Germany 21.5% and France 19.5%. Our rough estimates suggest that on a comparable measure of GDP the Scottish figure would be around 18.1%. These figures clearly contrast with the dismal - and inaccurate - picture painted by the Committee's report."

Ouch!