Scotland among most productive areas as London’s financial sector drains the blood of other parts

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The diagram above: ‘presents output per hour for the manufacturing and services industries in the UK economy by each of the regions, taking into account the total hours worked in each region.’

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/labourproductivity/bulletins/labourproductivity/apriltojune2018

You can see that manufacturing productivity in Scotland is the second highest and services productivity is third, in the UK. However, it seems that the financial sector is far from being the ‘golden goose’ it is often portrayed as and might be better described as a ‘cuckoo’ in the UK economic nest. See this from Professor Richard Murphy on 5th October 2018:

‘We all need finance, but only up to a point. Once a financial centre grows above its useful size and roles, it starts to become predatory and harms the economy that hosts it. This happens in many ways: an oversized City drains our best educated and most talented people out of manufacturing and other economic sectors, generates large economic distortions and financial crises, and many of its members focus on devising ever more creative ways to extract wealth from other parts of the economy.  A new report The UK’s Finance Curse? Costs and Processes by Andrew Baker of Sheffield University, Professor Gerald Epstein of the University of Massachusetts Amherst, and Juan Montecino of Columbia University, published by the Sheffield Political Economy Research Institute at the University of Sheffield, reveals that the UK has suffered a £4.5 trillion cumulative cost in lost economic output from 1995-2015 – and counting. That is equivalent to a £170,000 loss per British household.’

http://www.taxresearch.org.uk/Blog/2018/10/05/the-finance-curse-the-new-book-from-nick-shaxson/

The full academic paper can be found here.

 

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4 thoughts on “Scotland among most productive areas as London’s financial sector drains the blood of other parts

  1. Alasdair Macdonald October 6, 2018 / 8:53 am

    Have you made a misstatement regarding the ‘services’ sector output for Scotland? The graph shows that services’ output in Scotland is the third highest in the UK – almost certainly because of the kinds of services such as tourism and the financial sector (Glasgow and Aberdeen are fairly significant as well as Embra!), which you list.

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  2. Alasdair Macdonald October 6, 2018 / 8:57 am

    The ‘London’ effect, can perhaps be explained by a reading of Stanley Checkland’s ‘The Upas Tree’, which was about the similarly inhibiting effect that the stupendous economic growth of Glasgow in the 18/19th centuries had on the surrounding area. (The upas tree is a mythical (?) tree which grows in Java and is reputed to destroy all plant life within a 30 mile radius).

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