Scotland needs to boost investment in key infrastructure by more than £400million a year if it is to compete successfully on the international stage, a new report says.
That is the minimum cost of bringing transport links and utilities up to the standard of the world’s most advanced economies, according to business think-tank N-56.
It says countries such as Switzerland, Singapore and Finland are way ahead in terms of infrastructure, and failure by Scotland to catch up could have a “significant” negative impact on its economy.
N-56 – named after Scotland’s latitude and founded by millionaire property developer Dan Macdonald – adds that an extra £400million annual investment would boost this country’s economy by £1.1billion, stimulating growth, maximising competitiveness and creating thousands of jobs.
Its economic impact estimate is based on figures from the Civil Engineering Contractors’ Association, which said recently that bringing infrastructure up to the standard of other developed economies could contribute £100billion a year to the UK economy by 2026.
Big infrastructure projects north of the border include the £1.5billion new crossing being built across the Firth of Forth and the £745million bypass road planned for Aberdeen.
N-56 admits tight budgets mean further major investment is “difficult to achieve”.
But it outlines some ideas for making it happen, including the launch of Scottish infrastructure bonds, the development of airport hub services and the extension of high-speed rail to train stations north of the border.
It also suggests Scotland should look across the sea to Ireland’s national development plan as a model for “coherent” infrastructure planning, as opposed to the disjointed approach hampering progress in this country.
N-56 says its proposed £400million funding increase would raise Scotland’s annual infrastructure spend to £1.2billion, or 0.8% of the country’s total economic output – the equivalent of a new Forth crossing every year.
It also warns that if infrastructure investment does not return to 0.8% of gross domestic product, the benchmark widely deemed necessary to support an advanced economy, it could mean this country missing out on at least £7.5billion a year by 2026.
Economist Graeme Blackett, the report’s lead author, said: “High quality infrastructure is vital to delivering economic growth, while poor quality infrastructure can inhibit competitiveness and constrain it.
“We have a wealthy and strong economy but invest less in infrastructure than other advanced economies such as the Netherlands and Singapore, and have paid a high price for this.
“Under-investment in infrastructure makes our economy less competitive than it could be and in order to bring our infrastructure up to the standard of global competitors we need to pump over £400million into it.
“By doing so we will reap the rewards and realise our full potential as a nation, which includes boosting the Scottish economy by over £1.1billion.”
He added: “In terms of financing these requirements it seems unlikely that these can be funded in full under current capital budgets.
“However, investment in improving infrastructure need not be entirely funded from public sector sources and we should look towards other innovative models.
“One potential model would be Scottish infrastructure bonds, which could be offered to international markets and as domestic savings products, a model that has been adopted successfully in Singapore.”