As it is 20 years since the Scottish Parliament was established, it is an opportune moment to reflect on what has changed in our economy over that period and to look forward to what may change in the next 20 years.
In many respects, the last 20 years has been a game of two halves, with the first half seeing the economy performing strongly and the second seeing a major downturn, starting with the global financial crisis in 2008 and followed by further negative impacts such as the downturn in the oil price.
While Scotland’s economy has recovered, it has been a very gradual recovery. There have been strong points, for example, with employment exceeding expectations and reaching record levels. However, we should all hope that the next 20 years are more akin to the first half of the last 20 than the second.
When we look forward to the next 20 years, the challenges ahead may seem quite daunting when we consider issues such as Brexit, the possibility of Indyref2, the 4th industrial revolution, climate change, an ageing population, and the rise in geo-political tension, trade wars and tariffs.
What will pan out is obviously uncertain however there is every likelihood of much more and much faster change. As Justin Trudeau, Canada’s prime minister, told the World Economic Forum in 2018: “The pace of change has never been this fast, yet it will never be this slow again.”
While we will continue to face an environment of ongoing uncertainty, it is important that we do not lose sight of the longer-term trends that should provide a boost to the economy. Change creates opportunities and it is imperative that we seek to identify those future opportunities that will allow the country to continue to grow and ensure its future prosperity.
Scotland needs to be able to adapt to the challenges it faces at pace and be to bolder. Trends such as the 4th industrial revolution and climate change will be disruptive but they will also encourage investment and innovation.
In Scotland, Fintech is one sector that is leading the way. Changes in consumer demand, evolving technologies and regulatory developments have seen the financial services (FS) sector embrace new technologies and ensure it possesses a socially aware culture underpinned by financial inclusion and education. Scotland in many ways is unique in containing all of the elements in close proximity to fuel the growth of this sector and champion a vibrant ecosystem. As a Firm, we have been incredibly proud to support Fintech Scotland on leading the charge to seize this opportunity.
Over the next 10 to 15 years, our FS sector will evolve and adapt to support the next generation of skills required to embrace this opportunity. Recognising that an alchemy of technical skills with social understanding will be key. The rounded FS professional of the future will blend the data scientist and the anthropologist – a critical mix to not only understand how to design and build new services, but also importantly understand the social surroundings and context in which they sit.
While climate change concerns mean that there is rightly a real focus on energy transition, we cannot lose sight of the fact the UK will still be dependent on oil and gas as the country moves towards a low carbon future.
Anchoring experienced leaders with new talent who will use technology, such as digital and artificial intelligence, to ensure the energy industry is fit for the future is crucial. Similarly, ensuring the supply chain is able to survive and thrive is vital as we develop future energy resources.
For most businesses, whatever the sector, the projected decline in the working age population will be another challenge. Increasing opportunities for agile working and encouraging older people to remain in the workforce will be fundamental.
By way of example, in 2015, Deloitte established an industry-first Return to Work programme for people returning from a career break of at least two years. It was specifically designed to refresh knowledge and skills to help candidates transition back to the workplace with confidence and has resulted in almost 50 people successfully joining the firm. More, similar, initiatives are likely to be required to meet our labour needs.
The scale of change we will likely experience over the next 20 years will undoubtedly create significant opportunities and Scotland needs to position itself to take advantage of these. However, as the Commentary notes, if Scotland is to do this, everyone will need to be bolder than in the last 20 years.