Official Report 1027KB pdf
The next item of business is a debate on motion S6M-18795, in the name of Kate Forbes, on supporting Scottish exports in response to global uncertainty.
15:27
Scotland is a trading nation. We have a long and rich history of producing goods and services that are highly regarded and sought-after across the world. Many of the goods that we export are instantly recognisable and symbolic of the high quality of Scotland’s produce and natural resources. Scotch whisky and Scottish salmon, for example, have long-standing and well-established places in food and drink markets around the world.
Our products and services are also reflective of international demand for the innovative nature and future potential of the Scottish economy. However, the global economic and trading conditions within which Scotland seeks to grow its exports are incredibly challenging. The nature of that challenge is multifaceted.
Will the minister take an intervention?
I have high hopes for a well-informed debate that looks at all the issues this afternoon, starting with Craig Hoy.
I thank the minister for giving way and I welcome her commitment to global free trade. Can she therefore point to a single global free trade agreement that her colleagues at Westminster supported?
The member will recall how warmly I welcomed the India free trade agreement and how strongly I commended it because of the opportunities for growth, in particular for whisky.
I will get back to the challenges—from the continued drag on trade with the European Union post-Brexit, which Scotland did not vote for, to the turbulence and uncertainty created through the introduction of and response to new US tariffs this year. I will say more on those later.
I hate to disappoint the Deputy First Minister, but if she looks at the robust performance of British business in terms of exports to the EU from 2015 to 2024, she will notice that there has been substantial growth in real terms. Taken at 2022 prices, our total exports to the EU in 2015 were £319 billion and, in 2024, they were £349 billion. Any doom and gloom around the issues that the Deputy First Minister has raised is misplaced.
That cues me up very nicely to commend the results from Scottish Enterprise-supported businesses last year. Scottish Enterprise supported £2.46 billion in planned international sales, which is a record high, and facilitated more than 15,000 new and safeguarded jobs and £442 million in innovation investment.
It is the support for exporters that is most commendable in those figures. What Stephen Kerr does not take into account is the fact that Brexit had a particular impact on smaller businesses, in particular on the export of perishable goods—the Scottish salmon figures speak for themselves in terms of the reduction in sales that the industry saw in the immediate aftermath of Brexit.
In this informed debate, I am happy both to commend the work that Scottish Enterprise does and to point to particular industries that have talked about the immediate impact that they have seen through Brexit.
I am very grateful to the Deputy First Minister for giving way—she is always very generous in that way.
The original paper “A Trading Nation: a plan for growing Scotland’s exports”, which came out after Brexit, set a clear target of raising exports to 25 per cent of gross domestic product. How is Scotland faring against that clear target?
If it is okay to do so, I will come on to talk about “A Trading Nation” and will set out a little more of the details.
Our analysis has shown that, as a result of Brexit, our trade in goods with the EU was 12 per cent lower in 2021—the first year of the United Kingdom-EU trade and co-operation agreement. We have worked really hard to continue—
No wonder—it was during Covid.
I hear the member saying, “No wonder”. I think that that makes the point that it was—
Will the cabinet secretary take an intervention?
I am four minutes in and that would be the fourth intervention, so I will keep going.
We can all agree that exporters need additional support, and we are providing it through a six-point export plan that was announced in the most recent programme for government. We have been explicitly clear on the crucial contribution that export growth makes to Scotland’s economic prosperity. As Daniel Johnson said, in 2019, we published the first export growth plan—“A Trading Nation: a plan for growing Scotland’s exports”. At its core, the plan was clear that we best increase the percentage of exports comprising Scotland’s GDP by focusing on those companies, sectors of the economy and international markets that offer Scotland the greatest export growth potential.
Of course, the world evolves and changes, and so does the work that we do within the framework of “A Trading Nation”. Since 2019, we have flexed our delivery to meet the challenges of the pandemic and Brexit, but also to seize emerging opportunities. We have published a series of sector export plans, including for the renewables and hydrogen sectors, to take action now to seize the opportunities of the future. Earlier today, we published an update to the priority international markets for Scottish exports to ensure that those efforts and activities abroad continue to be targeted at areas with the greatest potential return for Scotland’s economy.
It is always worth looking at the impact of particular support. In 2023, an independent evaluation of Scotland’s export support and promotion delivery showed that supported companies achieved £1.6 billion in additional exports; companies that received support grew exports by 140 per cent more than similar firms without support; 53 per cent of companies created or safeguarded jobs; and more than half introduced new products or improved processes, which shows strong wider economic impact.
Building on all that, on 1 September, Scottish Enterprise announced the highest-ever forecast sales figures, which I mentioned, of almost £2.5 billion.
I turn to the six-point export plan, which, specifically, increases our business support offer to exporters from Scottish Enterprise, increases our investment in sector export plans, and increases the scope of our international trade partnership programme, which members will know that we run in collaboration with the Scottish Chambers of Commerce. The plan increases the number of inward trade missions to showcase Scotland’s export strength to international buyers, and it will increase the number of outward trade missions that we deliver, exposing even more Scottish companies to new and emerging international markets. We will publish an export plan specifically for the United States to allow us to focus on the specific areas of that vast critical market that present Scottish companies with the greatest opportunity.
With an additional £1.6 million of investment, building on the existing annual support for the “A Trading Nation” strategy and Scottish Enterprise’s work on international growth, we will deliver a 33 per cent increase in the number of chambers trade missions and help an extra 100 exporters to find new customers in order to generate an additional £75 million of forecast export sales.
We have also set out actions that we are taking to close the export gap among women-led businesses. Taken together, those actions will help Scotland to maintain its place.
As of August 2025, more than 11 per cent of Scottish businesses reported that they were being affected by new US tariffs. That rises to nearly 23 per cent among goods exporters, who also noted that the most common issues were increased costs and supply chain disruption. A quarter of goods exporters were expecting to be affected in this month of September. The issues that we seek to address are real and are affecting businesses right now.
Just yesterday, Richard Lochhead and I met business leaders to discuss their concerns on trade, share some of the details of the additional support that we are providing and take on board any further suggestions that they had.
When Scottish Enterprise announced its highest-ever forecast export sales results, it did so at Piramal in Grangemouth—a fantastic example of how a company exporting from Scotland can support jobs and the local economy.
We want to work constructively with others—even others in this chamber—as we advance Scotland’s export ambitions. When the First Minister met the President of the United States earlier this summer, he reiterated the Scottish Government’s strong support for efforts to finalise the remaining elements of the UK-US deal and provide long-term certainty and stability to our transatlantic trading partnership. He put issues such as whisky on the trade deal agenda during that meeting and, of course, in a meeting with the President earlier this week, he continued to press for a better deal on whisky tariffs, which are currently costing £4 million per week.
We have also worked closely and collaboratively with the UK Government as we support our exporters, including recently in the assessment and response to the impacts of US tariffs.
On some levels, that has been effective. However, on other levels—as was demonstrated through the lack of engagement on the publication of the UK Government trade strategy in June this year—there is a risk that we are not harnessing our collective capacity as we could.
More fundamental issues persist. We continue to call on the UK Government to fully address the continuing damaging impacts of Brexit on Scottish and UK trade. In that regard, the Government remains firm in its view that the best means of growing Scottish trade in the EU is by rejoining the EU.
Presiding Officer, I note that I am out of time. I have not quite finished—
I can give you a bit more time.
Thank you.
I am very confident that Scotland and our exporters have the capacity, potential and ambition to continue to take advantage of the shifting opportunities in international trade, both now and in the years ahead.
During recent engagements—for example, on trade and investment in India and with the United Arab Emirates—I have been struck by both the scale of the opportunity and the incredibly positive feedback that I get about Scottish products and Scottish businesses.
We want to continue to lead on seizing the economic opportunities for Scotland abroad.
I move,
That the Parliament recognises that demand for Scottish exports is strong due to Scotland’s high-quality products and services, and its excellence in sectors such as food and drink, professional, scientific, and technical activities; notes that global trade challenges, including geopolitical uncertainty, Brexit, and trade tariffs, are having a detrimental impact on Scottish businesses; welcomes the Scottish Government’s Six Point Export Plan, which is supporting Scottish businesses to respond to these challenges; notes that the additional support being provided, builds on effective and continued delivery of A Trading Nation, the Scottish Government’s export growth strategy, as indicated through Scottish Enterprise’s highest ever level of forecast export sales in 2024-25; acknowledges that meaningful collaboration between partners to promote Scotland internationally, using the Scottish Government-led award-winning Brand Scotland collateral, will boost awareness of Scotland’s strengths and increase opportunities for export growth, and calls on the UK Government to fully address the continuing impacts of Brexit on Scottish and UK trade by rejoining the European Union, and reverse its damaging decision to increase employers’ national insurance contributions, which is harming business confidence and Scotland’s economy.
15:39
I remind members of my entry in the register of members’ interests—specifically in relation to the hospitality that I have received from the Scotch Whisky Association.
Since the parliamentary session started, this is the first proper chance that I have had to say that we are going to miss Kate Forbes in the chamber. I think that we all understand the reasons why she will step down from Parliament next year, but I genuinely think that she will be a loss to the Parliament. That view is reflected across the great majority of members—perhaps not every member—of the Parliament and by members of the business community, too. She will be a loss to the Government and to Parliament, and we wish her very well for the future.
In that tone, I agree with what the Deputy First Minister said about the need to celebrate the success of Scottish exports. She was right to highlight the tremendous success of exports such as Scotch whisky and Scottish salmon, which are flagships for the Scottish economy and are being exported around the globe. They are recognisable Scottish products that are growing our global brand. That is all to be celebrated.
We also need to acknowledge, as Kate Forbes did, that there are serious challenges with tariffs in the US and elsewhere, which I will come to later. Between 2018 and 2022, global trade rose by 10 per cent, and in the same period, Scottish onshore exports fell by 12 per cent. Not everything in the garden is rosy.
There were some glaring omissions in the Deputy First Minister’s comments. Scotland’s largest export by far is oil and gas, which represented 32 per cent of overall international exports in 2023. Curiously, though, there was no mention in her speech of the oil and gas sector.
However, the even more significant omission was of the defence sector, which is, to be frank, astonishing in the context of recent news about support for Scottish shipbuilding. It was announced just last week that Norway has agreed a £10 billion deal for anti-submarine warships to be built in the UK, which will secure thousands of jobs at BAE Systems in Glasgow—investment that was possible only because the Royal Navy had already contracted with BAE Systems for the construction of type 26 frigates. That investment will support an estimated 103 businesses in Scotland.
I agree with the member about the importance of defence contracts. Does he agree that we need to extend every possible support to Babcock in its efforts to export frigates to Denmark?
Absolutely. Indeed, Mr Johnson has pre-empted my very next sentence, because I was about to talk about Babcock in Rosyth, which is part of the area that I represent. Babcock hopes to secure a contract, which is worth more than £1 billion, to build four frigates for the Danish navy. That is a real tribute to the expertise in naval vessel construction that we have established in Scotland, which is, again, based on Royal Navy contracts, and which shows the quality of the highly skilled workforce that we have in Fife and on the Clyde.
There was no mention from the Deputy First Minister of all the remarkable good news that has been all over the media for the past week, and nor can I see a single mention of it in all 18 pages of the document that the Scottish Government published today—“A Trading Nation: Updating Scotland’s Country and Sector Prioritisation”. The document is full of colourful pictures—I congratulate the school student on work experience who had a happy week in the Scottish Government, colouring in all the pages—but there is not one mention of the defence sector, which is doing so well for Scottish exports. There is reference to a sector called “Engineering and Advanced Manufacturing”—I wonder whether that is some sort of code for defence. I do not understand why the Scottish National Party Government is not shouting from the rooftops about the tremendous export deals that have been agreed by Scotland-based companies. I fear that, once again, student politics is at play, rather than any serious recognition of the Scottish economy’s strengths.
The Deputy First Minister referred to the First Minister’s visit earlier this week to the United States to meet President Trump to discuss the unreasonable tariffs on Scotch whisky and other Scottish exports. That is a welcome intervention by the First Minister. I am sure that he now realises how unwise it was to back so publicly Mr Trump’s opponent in the presidential election last year.
As I pointed out in the chamber earlier, there is something of an irony in the stance being taken by the First Minister, reflected in the motion, which calls for Scotland to rejoin the European Union. The European Union currently faces a tariff on exports to the US of 15 per cent, whereas in the UK we currently face a tariff of only 10 per cent.
As part of the UK, we have an opportunity to negotiate that tariff down, as the First Minister was trying to do. That opportunity would simply not be available to us if we were part of the EU, so the Scottish National Party’s plans to leave the UK in order to join the EU would be devastating for Scottish exports. We need to remember that our biggest export market for Scottish goods and services is the rest of the United Kingdom. The value of our exports to the rest of the UK is three times that of exports to the European single market. To leave the UK single market in order to rejoin the EU would be cutting off our nose to spite our face.
We also see opportunities from the free trade agreement with India, which was progressed by the previous Conservative Government and is now being taken forward by Labour. At lunch time, I had the pleasure of meeting the Indian high commissioner, who is visiting the Scottish Parliament, and talking with him about the real benefits from that trade deal to both countries. It would have particular opportunities for the Scotch whisky sector, given the enormous marketplace that India represents for future growth. It is a market of a billion people, many of whom are interested in purchasing Scotch whisky, which is currently suffering from extremely high tariffs that will reduce under that trade deal.
That trade deal with India would never have been possible if Scotland was part of the EU. There was no interest in the EU in doing a deal with India. The deal was possible only because of Brexit. In her response to Mr Hoy, the Deputy First Minister said that she had welcomed the trade deal with India, and she did indeed. However, it is not the Scottish Parliament that votes on such trade deals but the House of Commons, and I will be very interested to see how her SNP colleagues there vote on that trade deal, given that that is where the support really matters.
I am aware that I am over time, but I will get to the end in a moment. There is an economic backdrop to exports. Scottish businesses continue to be held back by higher taxes, including income tax and VAT; the level of business rates; and excess regulation. Without a more business-friendly environment in Scotland, Scottish exporters will continue to struggle to compete. Addressing all those issues is within the gift of the Scottish Government. If it is serious about supporting exports, it needs to start reducing the cost burden for Scottish business and supporting growth.
We wish to join the SNP in celebrating the success of Scottish exports, but its policy solutions are simply doing more damage. It needs to wake up to the strength of the defence sector in Scotland and the value to our economy of exports from that sector, rather than being ashamed of such an important part of the Scottish economy. Those points are made in my amendment.
I move amendment S6M-18795.3, to leave out from first “notes” to end and insert:
“recognises that Scottish exporters operate in a competitive global market and benefit from the UK’s ability to secure strategic trade deals and participate in global trading blocs, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership; recognises that agreements with India and the US mark a positive start in expanding opportunities for Scottish businesses in these important markets, alongside deals with partners such as Australia, Japan and Singapore; highlights that Scotland’s key sectors, including engineering, advanced manufacturing, food and drink, energy, chemical sciences, and financial services, thrive because of enterprise, innovation and private investment rather than government brand campaigns; welcomes the strength of Scotland’s defence sector in winning major export orders, exemplified by the £10 billion Type 26 frigate agreement with Norway for Scotland-manufactured warships that will sustain thousands of skilled jobs and growth across Scotland’s wider manufacturing base; rejects calls to rejoin the EU, which would risk regulatory uncertainty and distract from delivering meaningful support; regrets that the Scottish Government continues to use trade policy to promote constitutional division, rather than business confidence, and calls for both of Scotland’s governments to focus on cutting costs for employers, reducing unnecessary regulation, simplifying trade routes and working in genuine partnership with industry to grow Scotland’s exports and secure jobs.”
As colleagues will have picked up on, we have a bit of time in hand, so members will get time back for any interventions and probably latitude over and above that.
15:48
Thank you, Deputy Presiding Officer—I always enjoy a bit of latitude.
Given the rekindled enthusiasm for independence that we have seen from the Government in recent weeks, it is a bit brave to bring an export debate to the Parliament, given that, in my broad view, frontiers put barriers in the way of trade. However, I might be doing the Government a disservice. Given that 70 per cent of our trade is with the rest of the United Kingdom, the Government might think that, with a stroke of the cartographer’s pen, it can treble Scottish exports. The problem with that is that it is clearly bonkers.
As reasonable as the Deputy First Minister tries to be, a fundamental stumbling block is that, as long as the Government pursues its constitutional obsession, it will seek to put barriers between Scotland and its biggest market—and to create uncertainty for business, which is undoubtedly damaging for the economy. Unfortunately, what we are seeing from the Government all too often—to be fair, I do not accuse the Deputy First Minister of this—is selective use of data and grandstanding, whereas what we need for trade is pragmatic action, which is what we have seen from the UK Government to date.
The India trade deal, which has been referenced in all the speeches so far, is very important. I acknowledge that it was initiated by the previous UK Administration, but it has been taken forward as a priority by the incoming Labour Government, because it is worth £4.8 billion to the UK economy and 2,200 jobs. Of that £4.8 billion, £1 billion is the value to the whisky industry. Under the deal, tariffs have been reduced by half immediately—to the world’s biggest whisky market—and will be reduced by half again in 10 years’ time.
There is not just the India trade deal. The UK Labour Government has prioritised bilateral deals and discussions with France and Germany, and we have secured the frigate exports worth £10 billion that have already been mentioned. There has been a renewed approach from the Scotland Office, which is seeking to support trade and investment and promote brand Scotland. I see that Kenny Gibson has enthusiastically got to his feet to agree with me.
Actually, first, I thank Daniel Johnson for taking an intervention. Today’s Financial Times reported that US pharmaceutical giant Merck has cancelled a £1 billion investment in London and that 125 scientists will lose their jobs, with Merck saying that the Labour Government has made the UK “uncompetitive”. Surely Westminster is damaging not only Scotland but the wider UK with its trade policies.
Kenny Gibson’s party seeks to introduce new frontiers and barriers. It is very difficult to talk about stability and certainty from the position of the SNP benches.
The document “A Trading Nation”, which was published in 2019, was important. It was a serious bit of work, and it sought to set out clear steps. That is why I was genuinely surprised when I saw the latest update, because it has more maps in it than numbers. That is a problem.
In the 2019 document, which came after Brexit, there was a clear articulation of what had to happen. The strategy sought to increase from 11,000 the number of jobs that are derived from exporting, but there has been no update on that number. It sought to integrate Scottish Development International with the rest of the business support regime, including Business Gateway. To be fair, I thought that the Deputy First Minister set out some useful things in her speech, but we could use more clarity about how that integration will be carried forward. The strategy discussed expanding the GlobalScot network to 2,000, which is another bit of information that it would be useful to get a progress update on. Furthermore, a ministerial trade board was set up but, unfortunately, it met most recently 18 months ago, as far as I can tell.
If the Government is serious about trade, it has to be serious about the progress that it is making against what was a substantial bit of work. As I alluded to in my intervention on the Deputy First Minister, on page 13 of the 2019 document, under “Monitoring and evaluation”, the bottom line is very clearly set out, and it says that the approach sought to increase exports as a proportion of gross domestic product to 25 per cent.
Kate Forbes rose—
Just a moment.
The reality—according to the numbers that I have seen—is that that proportion has risen to only 21 per cent, and there has been no progress in that over the past four years. The world has been experiencing economic difficulties and headwinds, but there has been no substantive progress in the past four years against that key target.
I am happy to give way to the Deputy First Minister.
I apologise that I failed to respond to Daniel Johnson’s intervention. He just cited 21 per cent, but I was going to go with 20 per cent, so it is currently 20 per cent against the target of 25 per cent. The two biggest impacts on that have been Brexit and the pandemic.
We have a lot of good data, which we could share in more detail—I would be happy to do that. For example, we know that 36.7 per cent of EU exporters in Scotland reported direct costs, with Brexit being one of the biggest impacts. We could perhaps share a bit more data.
I would be grateful for that. I say to the Deputy First Minister that there might well be interesting phenomena and dynamics—or even initiatives—but we have not seen progress against the fundamental target. Interestingly, there was progress immediately after the pandemic, but it has stalled since then.
A final aspect of the report that we have seen no further examination of is its useful segmentation of exporters into four categories: top 100, solid performers, sleeping giants and global by birth. I would like to know what progress has been made against those key segments, because that would give the sort of strategic clarity that we need.
The document “A Trading Nation” was a serious bit of work, and I would like to see some robust reporting and measurement against it. It set out a good pipeline. Unfortunately, as ever with this Government, its intention is good, but its follow-through and consistency are poor.
I move amendment S6M-18795.1, to leave out from first “notes” to end and insert:
“welcomes UK Government action to strengthen international alliances and reduce trade barriers with economies around the world through diplomacy and the delivery of trade deals with India, the US and the EU; calls on the Scottish Government to stop contributing to instability for business through its repeated calls for an independence referendum, and believes that exporting to the rest of the UK, Scotland’s biggest trading partner, is a key stepping stone for international exports, and that both should be imbedded in business support from day one.”
15:54
I am pleased to be speaking in my eighth debate this week—it has been quite a week. I will try to stick to exports and not confuse it with any of the other topics that we have spoken about.
This is quite a good debate. Thursday afternoon slots are not always well occupied, but this slot—the graveyard slot in the Parliament—is a good one, because it gives us a chance to air issues such as this one in a constructive and often good-humoured manner.
As has been said, Scotland’s exports are some of the finest in the world. We talk about that often, particularly in cross-party groups that have an interest. Whisky and salmon often come up when we meet people overseas and talk about great Scottish products. However, over the years, I have tried to look beyond the traditional Scottish exports of tartan and tweed and look at some of our emerging markets.
Scotland is leading the way in many markets. Undoubtedly, financial services—our expertise and product—is one of our biggest exports. We do not talk about life sciences often. Perhaps it has had a controversial past, but the pharmaceutical industry and other such industries are doing incredibly well in the west of Scotland, too. Our space and satellite industry is another booming area that we should be very proud of. We are producing—and soon we will be launching—satellites that are smaller than a microwave. All that ingenuity originated in Scotland, and that manufacturing is going on in Scotland as well. It should be exported, but not enough of that is happening.
Then there is our green energy production. Some of our experts are going all over the world on business-class flights to teach people in other countries how best to manage offshore wind, carbon storage and capture and battery technology. We should be leading the way in hydrogen and in other forms of renewable energy. Again, there is so much potential in that area, but the conversation too often focuses on the one or two big-ticket items—although I have nothing against the oil and gas industry.
Let us look at some other industries, such as gaming, animation and film production. Those industries are booming, too. Just across the street from the Parliament, there is a company that has done incredibly well in the gaming industry, and parts of Scotland are growing in the media landscape with Hollywood film studios producing films here.
All that is to be admired and acknowledged, because those businesses have got on with it without the intervention of Government. We have talked a lot already this afternoon about where we need the Government to intervene on failing businesses, but those businesses tend to be the businesses of old, the industries of old and the technologies of old.
A small country such as Scotland has an opportunity to be at the forefront—the avant-garde—of new and emerging technologies. That means having a Government strategy—and a strategy is not the same thing as spin. I agree with quite a lot of what is in the Government motion, but it does not contain a huge amount of substance on the wider strategy. There has already been some critique about those lovely coloured-in documents, as Murdo Fraser referred to them.
Businesses are looking for two things from their Government. One is a wider strategy, because a strategy in one sector has to be part of a much bigger picture. It also has to fit in with the transport and infrastructure strategy, the digital connectivity strategy and the energy strategy. How do we keep companies’ costs down as best we can? It needs to sit in the round and be part of the whole.
I will talk about whisky exports, because we have talked a little bit about trade deals, and I want to mention them. We are facing international headwinds. There are things outside of the SNP Government’s control—I understand that—and there are even things outside of the UK Labour Government’s control. We are in an extremely volatile world market. Costs are rising and we are affected by decisions that are being made by other politicians thousands of miles away. When I speak to businesses that export, the two big things that they say they face are rising insurance costs and shipping costs. We all know what is happening in the Red Sea. We have to face up to and work together on those international out-of-control things.
The other thing that I hear from businesses is that what they are absolutely sick and tired of is both of Scotland’s Governments being at constant loggerheads with each other. I understand that some good cross-party working is taking place behind the scenes, but businesses want to see Government ministers from Scotland and Westminster going out into the world hand in hand to say publicly that Scotland is open for business.
There has been a little bit of critique of the six-point export plan, which feels a bit more like a relaunch.
Will the member take an intervention?
I will be happy to, in a second.
The target was to increase the value of international exports to 25 per cent of GDP by 2029. Of course, we took a hit on exports in the Covid years, when the figure dipped to 19 per cent. In 2019, it was 20 per cent. I believe that the cabinet secretary has just said that we are still at 20 per cent. Six years on from 2019—I have noted the issues that we had during Covid—we are five percentage points away from hitting the target. We need to ramp up our activity in that area. I still think that we can get to 25 per cent by 2029.
I should have made this intervention in Daniel Johnson’s speech. We published a formal review of the export strategy in 2023. I want to clarify that, today, we are discussing only our international priority markets. That is what the update document relates to. We thought that we would make sure that the maps were colourful, so that members knew exactly what we were talking about. However, the point has obviously been missed, so I will repeat it: today, we are simply considering our priority markets.
I would say that every market should be a priority, even those that are least visible on our radar. For example, the value of Scotch whisky exports to the Taiwanese market alone has gone up by 45 per cent to £290 million. That is nothing to do with any bilateral trade deals; it is simply a result of the good relationship with the buyers there.
I have two final points to make. First, let us not underestimate the value of the Commonwealth, which has a GDP of £15 trillion and 2.5 billion consumers. Secondly, small and medium-sized enterprises make up 99 per cent of Scotland’s businesses, but only 10 per cent of those are exporting. That figure must increase, and I would like the Government to produce a co-ordinated strategy for how we do that.
We move to the open debate.
16:01
With my region being what it is—it includes Orkney, the Highlands, Islay and Moray—I represent a lot of areas with distilleries, and I have tried to engage with the staff and owners of many of them. Each of them is very different, but there are some patterns.
I recently visited Tomatin distillery, which is an excellent example of a key local employer in a rural area. Last year, I heard a similar story in Raasay. Folk have moved back to that island community to take up jobs in the distillery, and some of them have even been supported with new housing. Communities should never be reliant on one sector to survive, but the whisky industry is often a great option for young people who want to explore hospitality, marketing or tourism roles.
During my tour of Tomatin distillery—which, incidentally, is a nice option for anybody visiting the Highlands who would like a short respite from the very welcome disruption caused by the on-going A9 dualling works on the Tomatin to Moy section—I heard the business’s values coming through very strongly. It hires locally and grows its own, and the result is a valuable product with a great story. It provides an opportunity for folk in the area to take up well-paid skilled employment and stay locally.
Those are the kind of success stories that we are seeing thanks to local investment and a focus on quality. Imagine how much more those communities could thrive without the handbrake of Brexit slowing them down. People across the world love those success stories, and they will pay for them. Our whisky industry must be supported to reap the rewards of its own success, which has been built up over decades.
According to the Scotch Whisky Association, the current 10 per cent tariff is costing the whisky industry £4 million a week in lost exports. That is a large number, but it is more than just a number. Take the example of Raasay: how many more homes, even given the extra cost of building in island communities, could that money fund? In Tomatin, what exciting new venture could the distillery have the time and the space to explore as a business? I do not envy the First Minister his role in engaging with the current US Administration, but, as a Highlands and Islands MSP, I appreciate the value of having a leader who is willing to work hard, engage and do what he can to get a good deal for whisky.
However, the reality is that there is no deal with Trump that could undo the damage of Brexit. The Tories and Labour are stubbornly ignoring that reality as if it were ancient history, rather than a set of extremely damaging daily realities that constantly hammer key industries in this country.
I agree with some of what the member is saying, but the problem is that we are talking about the volatility of geopolitics. Mr Trump might agree to reduce the 10 per cent tariff to 5 per cent, but, equally, he might wake up tomorrow and increase it to 15 per cent or even 50 per cent. We would have to deal with that. Therefore, is it not more important that the Scottish Government does not put all its eggs in one basket?
That is very much what I am getting at. There is no one deal that can undo poor decisions such as Brexit. I would much rather that the decisions on engaging and negotiating deals were taken here in Scotland, where we know what our needs and priorities are. That goes beyond big industries such as whisky. I have heard from numerous small businesses that are struggling with red tape and confusion related to the post-Brexit realities—and that is before we even get to the nonsense that is Labour’s national insurance hike, which has caused further expense and uncertainty at an already difficult time.
Businesses in Scotland deserve better. They deserve a little consideration and reflection from the UK Labour Government. Does it really believe that Brexit is going well, that the national insurance hike is beneficial and that the tariffs are fair, or will it follow the First Minister’s example and take action to support businesses through all that?
First, I believe that the Prime Minister spoke with the President when he was first elected a number of months ago, so the First Minister is following his example. The member has now called twice for the increase in employer national insurance contributions to be reversed. What would she cut, especially given that that increase led directly to £5.4 billion being added to the Scottish budget?
I would cut the funding that the UK Government itself has had to pay out for the national insurance hike. Those hikes are cyclical and we are not seeing any benefit from that at all.
The stories from Tomatin and Raasay show us what is possible when we invest in our people and in our products. The Scottish Government’s export plan is helping businesses to thrive despite all the challenges, but we must be clear that it is not a fair fight. Our businesses are being forced to run the race with a significant weight around their ankles, with that weight in the form of Brexit and damaging economic decisions from Westminster. The UK Government must stop ignoring reality. It is time for the Government to start listening to Scottish businesses and the Scottish Parliament, to reverse those damaging policies and to fully address the continuing impacts of Brexit by rejoining the European Union.
16:06
I hope that SNP members will eventually overcome their Brexit derangement syndrome. I already read out some figures, but many other bits of available data show that the genius and the driven energy—the animal spirit, if you like—of Scotland’s businesses and of the UK business sector have meant that we are making a success of the new arrangements that are now well in place after five years. I hope that the SNP will catch up with the rest of the country and with the Scottish business sector.
Stephen Kerr mentions the business sector, so what would he say to the third of Scottish businesses that responded to the business insights and conditions survey in November 2023 that listed Brexit as the main cause of export difficulties?
There have been many issues in those years—Covid, for example, was one. No one denies the bumpiness of the exit from the European Union and no one ever projected a smooth transition, but it has gone exceptionally well, and the numbers are there. As I did yesterday, I encourage members to look at the evidence that is available, instead of just chuntering on with the mild prejudice that some members suffer from.
Enterprise is Scotland’s engine. The SNP Government must realise that and stop behaving as it often does, which is as a regulatory monster that burdens businesses instead of backing them. Murdo Fraser was absolutely right to say that Scotland’s single biggest export market is not the EU or Asia but England. Our trade with the rest of the UK amounts to more than £52 billion a year—two thirds of all Scottish exports. I say to Labour members, too, that that is why the United Kingdom Internal Market Act 2020 is so indispensable and why any attempt to tinker with it would damage jobs and investment.
Stephen Kerr has referred to Scotland’s trade with England. Did he read the third annual report on the operation of the UK internal market, which said that England’s trade with Scotland is worth £75 billion?
It is, of course, a mutual arrangement—that is the nature of business. We sell and we buy, which is exactly why UKIMA is such an important piece of legislation. It guarantees Scotland and Scottish businesses frictionless access to the UK market, which sustains most Scottish livelihoods.
We should be celebrating the landmark £10 billion order for type 26 frigates from Norway. That order was years in the making and was secured because of the UK’s national shipbuilding strategy, which was launched by a Conservative Government. It will sustain more than 1,200 jobs directly and thousands more in the supply chain. Critics scoffed at the national shipbuilding strategy when it was launched, but today those critics owe an apology to the men and women on the Clyde, given the delivery of that order.
Does Stephen Kerr not find it rather odd that, despite the national shipbuilding strategy having been around since about 2019, there has been very little engagement from the Scottish Government on delivering it, despite the bulk of the UK’s shipbuilding industry being in Scotland?
This is another one of the Scottish Government’s derangement syndromes. It is not prepared to face up to the realities of our country’s economic make-up and to the strength of our defence sector, because it is ideologically opposed to so much that the defence sector represents.
Will the member take an intervention?
I am probably straying into time problems, but—
I can give you the time back for the interventions, Mr Kerr.
I am happy to give way to the minister.
I do not want to disturb the better together co-operation that is going on in the chamber, but I point out that the Scottish Government has worked very closely with the defence sector since we came to office in 2007. Indeed, more than £90 million-worth of support has been given to the sector, and we recognise its importance to the Scottish economy.
That will be why some ministers and many MSPs and MPs will not even meet representatives of the defence sector. I find all of that horribly inconsistent.
We should praise that incredible £10 billion export order, and we have other things coming along, as well. Murdo Fraser mentioned that that order alone benefits more than 100 Scottish businesses and 54 small and medium-sized enterprises. We also have the type 31 frigates, which present another fantastic opportunity. Denmark and Sweden are also interested, as are Poland and Indonesia—and we are not just talking about the construction of these wonderful products; selling the design to Canada and Australia has brought in more than £1 billion. That also directly benefits Scotland.
There is much to talk up when it comes to the defence sector, but I know that there is a split personality at work in the SNP. SNP members cannot bring themselves to celebrate Scotland’s successes in the sector for ideological reasons. Frankly, they are hostile to the defence sector. They have derided such companies for years and have neglected, ignored and boycotted them, but those companies are building the very technology that keeps us safe.
There is much more that I could say. I hope that members will agree that I have been willing to engage in a debate, but, instead of debating at the level of student politics, this Parliament should champion Scottish enterprise, back innovation and open the doors to the world.
16:12
Next Wednesday I will celebrate, if that is the word, 46 years as a member of the SNP. Frankly, I recognise absolutely nothing of the nonsense that we have just heard from Stephen Kerr. My grandfather worked in the shipyards, and the SNP has always supported a strong conventional defence policy. I am delighted that a small independent country with a population lower than Scotland’s has the resources to be able to invest £10 billion in conventional weapons, just as it covered the north Atlantic after the Tories, within weeks of coming to office in 2010, scrapped more than £4 billion of Nimrods that had just been upgraded by the Royal Air Force.
Colleagues have highlighted the indispensable role of our iconic trade exports such as salmon and whisky, and I include Isle Of Arran Distillers, in my constituency, in that. In that vein, I welcome the First Minister’s visit to Washington to press the US President for a better deal on whisky tariffs, which are currently costing £4 million a week, as Emma Roddick pointed out. The ball is now firmly in the UK Government’s court to make a deal with the US, which is the single largest destination for Scotland’s international exports, accounting for about 17 per cent.
The picture for Scottish exports is positive. Excluding oil and gas, Scotland’s exports remained stable in real terms at £18 billion between 2016-17 and 2023-24, despite the many challenges that those exporters faced. Those challenges are complex and, in many cases, are the result of global events such as trade wars, conflicts and energy spikes. However, there are also home-grown, self-inflicted problems, such as the hard Brexit that was inflicted on Scotland by the Tories and, of course, Labour’s damaging jobs tax. It is a delusion to say that Brexit has not impacted the Scottish economy. The Economist talks about it almost every single week, for example.
Despite those headwinds, Scotland’s exporters will be reassured that we have an economy secretary who is determined to protect and grow Scotland’s business interests around the world.
DSM-Firmenich’s Dalry site in North Ayrshire has been producing and exporting vitamins since 1958. It happens to be in my constituency and is the only vitamin C factory in the world outside China. Following a £300 million-plus investment backed by £12 million from Scottish Enterprise, DSM is scaling up production of Bovaer, a methane-reducing feed additive for cattle, to be sold in the US, the EU, Australia and South America. That factory was chosen from 35 DSM factories worldwide because of the quality of the workforce and their ability to deliver for the company and its customers.
DSM is part of Scotland’s thriving life sciences industry, and I am proud to be the chair of the cross-party group on that sector. The Scottish Government’s life sciences strategy for Scotland, which was published in February 2017, had a vision of making Scotland the location of choice for the life sciences community. Its mission was to increase the industry’s contribution to the Scottish economy to £8 billion by 2025. That was achieved in 2020—five years ahead of schedule—and life sciences exports are now worth £4.3 billion, which is not far off Scotch whisky exports of £5.3 billion. We should be proud that Scotland has one of Europe’s largest life science clusters and that our companies, universities and research centres have an international reputation for excellence. The sector is forecast to continue to grow. Much of that will be driven by increased exports.
I am encouraged that increased funding for exporters and life sciences, among other sectors, was specifically mentioned in the Scottish Government’s six point export plan. I am just as delighted that the Scottish Government has increased funding for our international trade partnership programme to expand access to business membership organisations, which can bid for support for trade missions to become established in emerging markets.
With the assistance of Scottish Development International—the international arm of Scottish Enterprise—Scottish businesses delivered their highest-ever level of planned international sales, reaching an unprecedented £2.46 billion during 2024-25. That is a 20 per cent increase on the previous year. Therefore, it is disappointing when some Opposition MSPs criticise those hard-working trade and investment specialists. However, it is not only MSPs. The Labour MP for Dunfermline and Dollar described our international offices as
“a vanity project”
and said that they
“serve little practical purpose”,—[Official Report, House of Commons, 2 July 2025; Vol 770, c 106WH.]
while the Liberal Democrat MP for Edinburgh West referred to them as “largely unnecessary” mini embassies. However, she is on record as saying that it is not Scotland’s oil but Britain’s oil, so we know where her loyalties lie. The Tories’ anti-business stance when it comes to exports facilitated by Scotland’s international offices is well documented.
I encourage all Opposition colleagues to, as some have done, join my party in celebrating the great success of Scottish international exports, which were worth £31 billion last year, and their vital contribution to jobs, growth and the prosperity of our country. We should be proud of how attractive Scottish products and services remain to consumers across the world. That success is based on innovation, quality, hard work and exporters’ ambition to enter new markets, underpinned by a Scottish Government that is focused on delivery and assisted by our magnificent overseas office staff around the world. We have success in sectors such as financial services, aerospace, defence, photonics, energy, food and drink and life sciences. Scotland is globally competitive. Let us work together to ensure that that remains the case.
16:18
In my lifetime, from working as an economist at the Scottish Trades Union Congress to bearing personal testimony to the damage inflicted by the neoliberal experiment on my own family—the direct, deliberate and despicable result of Government policy which closed factory after factory, mine after mine, shipyard after shipyard—there has been no economic doctrine more dominant than the doctrine of free trade. Of course, it was then, and has always been, a fallacy—a fool’s gold. We do not really have free trade at all. Most markets are rigged, managed or monopolised. They are not free.
In recent months, we yet again witnessed its grim toll with the closure of the Grangemouth oil refinery and its replacement with an import terminal. And in recent weeks, the United Nations has warned that the Trump trade tariffs
“risk disrupting deeply integrated production networks”,
a recognition that, while we talk of nation-to-nation international trade, increasingly trade flows are dominated by intra-company transfers—circular trading within transnational corporations. So much so, that an index of manufacturing intra-industry trade produced by United Nations Trade and Development and revealed just last week said that the UK is second only to Canada in its exposure to this disruption, that we are twice as much at risk of Trump’s trade wars as China and India combined.
So what are the solutions? Well, this afternoon, the Government is asking us to put our faith in its updated export strategy, but since “A Trading Nation” was launched in May 2019 with its stated aim of growing international exports from 20 per cent of GDP to 25 per cent of GDP, our international exports have not risen. In fact, according to the Scottish Parliament information centre, they slumped to just 18.6 per cent of GDP in 2021. Neither will we find the answer in the Government’s latest six-point export plan, which calls for, among other things, an ever-greater dependency on foreign direct investment, when our economy is already overcolonised by a small number of transnational corporations. Just 60 firms now account for half of the total value of all our international exports.
As for the Deputy First Minister’s claim at the weekend that independence is an “economic necessity”, that is a soundbite that wilfully ignores the economic facts of the extent of our industrial integration, of the depth of our economic, fiscal and monetary interdependency, of the pattern of our trading relationships—that we export one and a half times more to the rest of the UK than we do to the whole of the rest of the world put together. But neither do I think that the answers to global uncertainty and declining exports are to be found in growth deals based on military rearmament, the war machine and the arms trade. The very idea of a defence dividend is misleading. What about the opportunity cost, and what kind of dividend is it when the international development aid budget is put to the sword to pay for it?
I remain more convinced than ever that the answers lie in greater economic planning; the development of an industrial strategy; on fair trade, not free trade; on the diversification of our export base, the diversification of our producers and our markets and not an intensification in the United States; on greater self-reliance and a strategy of import substitution as part of our response to climate change; more co-operative and employee ownership; and genuine community wealth building and democracy in our economy. In this Trades Union Congress week, that means stronger trade unions and a radical extension of workers’ rights.
Politics remains at its core a choice, a division between left and right—tackling economic inequality and injustice and a redistribution of power on the one hand or relying on trickle-down, the free market and free trade on the other. Members of this Parliament need to decide which side of that division, which side of that choice they are on.
We have eaten into some of the available time, so the generosity will be scaled back just a little.
16:23
I will use my short time in the debate to recognise the work that has been done over the years by the Scottish Government and the long-term commitment that pays bigger and bigger dividends to our agribusiness sector as time goes on. I particularly want to pay tribute to Richard Lochhead’s tenure as the first cabinet secretary for rural affairs, which started in 2007. His work to identify the huge potential of Scotland’s high-value and high-quality food and drink sector and get the Government behind it has changed our rural economies very much for the better. That work has been continued by his successors, including Mairi Gougeon.
This weekend, I will be heading along to Stranraer oyster festival, which is another success story of our food and drink sector. Many thousands of people will visit Stranraer to celebrate and taste that success but, before and after that festival, our world-class seafood will be exported to plates and kitchens around Europe and the rest of the world.
That is a tribute to the work that has been done both by the Scottish Government and the industry as a whole over the years to make Scotland’s exports an international leader. That success has been achieved in spite of the barriers, hurdles and blocks that have been imposed on Scotland because of Brexit. We will all have constituents whose businesses have experienced huge challenges when trading with the rest of Europe thanks to the Conservative Party and its failed Brexit, which is now being ably cheered on by Keir Starmer and his chaotic crew. It is a incredible tribute to the determination of our exporters, whether in food or drink or other industries, such as space tech and gaming, which Jamie Greene spoke about, that they have, for the most part, weathered the storm of Brexit and worked out new ways to survive and prosper, despite the forced isolation that has been imposed on them by the UK Government.
We can see in real time the huge impact that isolationism in trade policy is having across the Atlantic. Tariff barriers that have been put in place at the whim of a leader are having a crippling effect on many sectors, and even healthy industries, such as our whisky sector, are counting the cost, with £4 million per week in lost exports, as others have mentioned. Distilleries in my region, such as Crafty Distillery, Annandale Distillery, Borders Distillery and Bladnoch Distillery, are being hit by those tariffs. They are major employers in their communities across Dumfries and Galloway and the Borders and they are part of our world-leading food and drink offering. Over the summer, my former work colleagues from Los Angeles visited me and enjoyed a few drams from our local distilleries. A good-news story from their visit is that they agreed to help to support Scotland’s future whisky industry exports when they return to Los Angeles.
It is important for us to recognise our strengths. I am pleased that we have a First Minister who will stand up for jobs and industry in Scotland and who will use every tool at his disposal, including an audience with the US President, the man who has all the power to give Scotland’s whisky industry a bye when it comes to tariffs. However, the simple fact is that, if Scotland were a member of the EU, we would enjoy the benefits of belonging to that trade bloc. This country voted to remain part of that international bloc, yet we were torn out of it anyway. [Interruption.] I can hear Conservative members yitterin on at the other side of the chamber, but we know that Brexit has been damaging. For some reason, they just want to put their heids in the sand.
Our ultimate destination as an independent country must be as a full member of the European Union and the single market. We need to regain our place alongside our allies and partners on these isles and across the continent. In the meantime, I am proud that we have a Scottish Government that is investing in and supporting the industries of the future that will deliver greater exports and greater prosperity to our country and our communities. Innovations such as carbon capture, which is being rolled out by the Carbon Removers at Crocketford, and the green hydrogen facilities that are being built at Chapelcross are making Scotland a world-class exporter of the high-tech products that will drive the future and our economy. We need to turbo-boost that with independence and our rightful place as the EU’s 28th member state.
16:28
The debate is a welcome opportunity to acknowledge the high standard of Scottish exports, which span many different sectors from food and drink, including whisky and salmon, to the tech sector, arts and culture, and financial services. The debate could have been an opportunity to debate some of the challenges that those sectors face in a challenging global context. However, instead of having a meaningful debate, we have heard what we would expect from the Scottish Government and the SNP in that they have chosen to grandstand about constitutional issues.
Last week, the First Minister tried to rerun old debates about Scottish independence. This week, the Deputy First Minister has rerun old debates about Brexit, and, in today’s motion, the SNP demands that the United Kingdom rejoin the EU.
What does the member say to businesses that say that Brexit has continued to have an impact on them because of complexity at the border?
We have said many times before that Brexit had some difficulties to start with, but exporting opportunities were achieved and continue to be achieved through our support for the wonderful businesses that we have across the country. Those businesses adapted, and they continue to adapt to ensure that they get those opportunities. That is very much the case.
As I said, the Deputy First Minister is demanding that the UK rejoin the EU. However, the First Minister went to the United States this week to lobby for a reduction on whisky tariffs—something that is possible only because the UK is no longer a part of the EU.
The demands to rejoin the EU are therefore quite ironic. In fact, it is the whisky industry that demonstrates the potential that now exists for Scottish exports. Earlier this year, the UK signed a free trade deal with India that will see the current tariffs on Scotch whisky slashed, and they will be slashed again within 10 years. That will deliver countless opportunities for the industry and will create jobs right across the country. The deal is expected to boost whisky exports by as much as £1 billion over the next five years, and the Scotch Whisky Association has called the deal “transformational”. The Scottish Government has barely commented on it.
The opportunities for increased exports are not limited to India. We have opportunities the length and breadth of the country and the world. I hoped that I might hear some balanced views today and that the Government might acknowledge the fantastic opportunities that are already opening up for some of Scotland’s export industries. We have heard today from Murdo Fraser, Stephen Kerr and others about the winning of the defence contracts, including the £1 billion contract for frigates for Norway, the manufacturing of which will sustain thousands of skilled jobs and grow Scotland’s economy and wider manufacturing base.
We on the Conservative benches are fully supportive of Scottish exports, and we stand ready to support any measures that can help in that regard, including speaking out about the removal of regulatory burdens and working constructively with industries to support innovation and private investment.
Business wants stability; it does not want to rerun 10-year-old constitutional debates, which would only create further uncertainty and instability in the marketplace. Nor does it want to separate Scotland from the rest of the UK, which accounts for more than 60 per cent of Scottish exports.
In conclusion, there are many possible solutions to boost Scottish exports and to empower Scottish industries in the global marketplace. However, once again, judging from this debate, it appears that the SNP Scottish Government is simply not interested in finding those solutions.
We export defence, we export whisky, we export salmon and we export financial services. All of those sectors are important to our economy, our stability and our prosperity.
16:32
Before I begin my speech, I say to Alexander Stewart that data from His Majesty’s Revenue and Customs shows that, as a result of Brexit, the number of UK companies exporting to the EU has dropped from 120,000 to 100,000.
I should also mention that I am the co-convener of the cross-party group on Scotch whisky.
As Kenny Gibson indicated earlier, in the past week it has been announced that Scottish Enterprise-supported companies have reported a planned increase in international sales of more than £2 billion, which is among the highest annual growth figures ever achieved. That builds on the HMRC’s UK regional trade figures for quarter 1 of 2025, compared with the same time last year, which highlight that Scotland is the only country in the UK to have experienced an increase in the value of exported goods while all the other UK countries have experienced decreases. To be clear, England had a 3 per cent drop in exports, Northern Ireland had a 3.7 per cent drop and Labour-run Wales had a drop of more than 20 per cent. Scotland is also the only country in the UK where exports exceed imports, giving us a positive trade surplus in goods, which helps to support our economy.
That comes after a difficult period when our economy has faced the effects of Brexit, Covid and the war in Ukraine, which have impacted our ability to trade seamlessly with our European partners. Many sectors of our economy, despite struggling with Westminster’s national insurance hikes, are making record export sales. For example, Scottish salmon, which is now the UK’s top food export, had sales worth £844 million in 2024. However, those industries that are energy intensive, such as the whisky industry, have no access to UK Government support, despite the high excise duties, job tax hikes, high energy costs and £4 million per week of tariffs. The Scotch Whisky Association’s global export figures for 2024 show that the value of whisky exports stood at £5.4 billion, which is a decrease of 3.7 per cent on the 2023 export value.
I therefore welcome the Scottish Government’s six-point export plan, which will include more overseas trade missions and exporter showcase events, including a US export plan to identify states that offer the best markets for Scottish products, as well as increased funding for exporters in the technology, life sciences, renewables and hydrogen sectors. In addition, Scottish Development International has more than 30 offices around the world, with staff ready to help international companies to buy goods or expertise from Scottish suppliers, ranging from digital expertise to high-quality food produce. The Scottish Government is acting to support our exporters, but we also need the UK Government to act in those areas that are reserved to Westminster.
Despite the volatility in the export market, our service industries are also weathering the storm. Our financial services sector, including banking, insurance and asset management, is the largest hub outside London and it has delivered more than £10 billion in exports, with Edinburgh as a primary driver. Edinburgh’s tech sector, which is centred around CodeBase, the UK’s largest technology incubator, supports a dynamic software and information technology industry. The Scottish sector is worth almost £7 billion to the Scottish economy, and more than 60 per cent of those companies are now exporting across the world.
It is not all good news, however.
You need to conclude.
In the year ending March 2025, Scotland’s goods exports to the EU decreased by 8 per cent on the previous year.
I will finish with a phrase from the office of the chief economic adviser, which concluded that Brexit trade barriers were a “large negative economic shock” that cost Scotland’s economy £4 billion.
We now come to the closing speeches. I call Paul Sweeney. You have up to five minutes.
16:37
It is a pleasure to contribute to today’s debate by closing for Labour. I express my best wishes to Kate Forbes for her future endeavours. It has been a pleasure to work with her in the past few years of this parliamentary session. It is a small world. I discovered that we apparently grew up on the same street—Sinclair Gardens in Bishopbriggs—and it is good to know that it has exported a disproportionate share of parliamentarians over the years.
This has been an interesting debate that has reflected a common mission for everyone in the Parliament, which is to grow our national prosperity. That is a consistent endeavour. I remember that, when I worked at Scottish Enterprise, looking at assessments of Scotland’s position relative to trade in other parts of the world, in 2015 we were around 33rd out of the 36 countries who were then members of the Organisation for Economic Co-operation and Development. Unfortunately, that position has not really changed. We can talk about absolute numbers but, relatively speaking, Scotland still has a lot of work to do. The process cannot be reduced to exchanging political arguments. Parliament needs a common framework and a common mission for developing our country’s prosperity.
Members are engaging in the debate in a spirit of co-operation on how we deal with that, because, ultimately, there are external factors that we have to confront. The most notable of those is the increasingly complex and volatile geopolitics that we are encountering in the shift away from a unipolar world order to one that is more fragmented, with greater competition between great power blocs and a beggar-thy-neighbour approach to protectionism in trade. We cannot be industrially naive—we have to be alive to emerging situations and deal with them accordingly. We must bolster our domestic supply chains, and we have to be more interventionist in that regard. Mr Leonard mentioned the need to be more geared towards industrial planning, and I share that sentiment.
The current situation is counterproductive, of course. We know that tariffs are ultimately a tax on consumption and that they reduce economic prosperity. They have never worked, and it is deeply disappointing that the United States has taken that course. However, it was welcome news to see the First Minister join the Scotch Whisky Association on its trade mission to Washington DC to press for a more favourable deal for Scottish whisky distilleries, which have been dealt a significant blow since the President announced the tariffs on imports to the United States.
According to the most recent survey of Scottish businesses, around 11 per cent have reported being impacted by the rise in American import tariffs earlier this year, which figure rises to 27 per cent for manufacturers. Therefore, we are seeing particular exposure in our manufacturing sector, in which businesses have cited impacts including increased additional costs, supply chain disruptions and reduced demand. Some 13 per cent of businesses in Scotland that were surveyed expect those tariffs to impact their business negatively.
It has been mentioned in the debate that the tariffs are costing our country £4 million a week, so it is important that both the UK and Scottish Governments exercise whatever influence they have to secure a better deal. It is to be hoped that, in time, the Americans will see the folly of introducing such tariffs.
It is a shame that our single biggest export—our national drink, Scotch whisky—is so affected by the situation, but it is also important to note that the industry itself is dominated by foreign ownership, with many of the profits from Scotch whisky leaving Scottish shores. Indeed, in 2021, a study found that nearly 70 per cent of malt whisky distilleries are owned by companies outside Scotland. We must look at our domestic ownership and investment in assets.
We have seen a recent decline in Scottish international goods exports. Last year, there was a 2 per cent drop to £18.4 billion. We have also seen a shallow exposure of Scottish firms to exporting activity, which has not changed substantially in the 10 years since I was at Scottish Enterprise. There are around 2,300 foreign-owned companies in Scotland that disproportionately take up the share of export activity, because they are already multinational in nature. That in itself is not a problem, but it signifies a lack of indigenous smaller firms in Scotland that are exporting. Consequently, the Scottish economy overrelies on foreign-owned companies to generate export growth. Indeed, large firms dominate exporting, in that they account for around 54 per cent of our export activity.
I regularly meet businesses, and in particular small businesses, that have simply stopped exporting to Europe since Brexit. Does the member agree that it is pretty ridiculous to try to divorce Brexit from Scotland’s export track record?
I agree that Brexit was a disaster—it has been the single biggest geopolitical mistake that this country has made, certainly in my lifetime. However, we are where we are, and we have to move forward together as best we can to minimise the frictions that the situation presents. I hope that we can do so together, because it has affected our ability to trade.
In 2019, of the 346,000 businesses in Scotland, only 11,000 exported. Of those that exported, 100 businesses accounted for 60 per cent of our exports, and 60 firms accounted for half of them. Therefore, there is a real shallowness in the entrepreneurialism of Scottish firms. We need to encourage greater activity and greater sales around the world. We can do that in practical ways, but ultimately it is about individual business behaviour. We need to look at how we can address that.
Our performance relative to that of other countries signifies how much work we have to make up. We are still rattling around the 20 per cent mark while other countries are way ahead of us. As I mentioned, Scotland is ranked in the bottom quartile of exporters in the developed world. If this country were to have the same level of exports as a proportion of GDP as other countries that rank in the top quartile, such as Denmark, Scotland would have an additional £35 billion of exports annually. If we can encourage our firms to be more ambitious in that regard, that will be a massive prize.
There are practical ways to do that. When I was at Scottish Enterprise, I worked on placing native foreign-language master of business administration students with Scottish firms to do business development. Within a few months, they were winning millions of dollars-worth of orders overseas. Even simple practices such as working with universities and with our foreign-language and international students can significantly change business opportunities. There are a lot of quick wins to be had.
The recent shipbuilding contract with Norway has certainly been a big win. It is to be hoped that the Government will get more involved in that project. I know that it has been reluctant to get involved thus far, but the project represents a huge prize for Scottish firms. There are opportunities for both small and medium-sized enterprises and the big primes to build on that contract with Norway—there is £10 billion of value to unlock.
Thank you, Mr Sweeney. I call Craig Hoy, who has a generous six minutes.
16:44
I join colleagues in paying tribute to Kate Forbes before she heads for the hills. I always enjoy listening to the Deputy First Minister. In my experience, she always talks the talk but, on occasion, she does not quite walk the walk. As she prepares to leave the Government, I invite her to do some walking of the walk and to perhaps join us in considering some common-sense policies that we would like the Scottish Government to adopt—most notably, to tackle the visitor levy. That would be a very sound legacy for the hospitality industry in Scotland, which is at serious risk from that and a number of other SNP policies.
I also thank Kenneth Gibson for his contribution and for his reference to the life sciences industry, which is vital for Scotland as we pursue a growth agenda. If we get things right, the industry could be a critical part of that. I commend him for being a brave soul as one of the few SNP back benchers who mentioned the defence industry, which is another critical aspect of growth for our country, in a positive light.
As I always do, I commend Alexander Stewart, who rightly identified the fact that the SNP simply cannot move beyond the constitutional debate.
Since we are talking about trade, one of the key negative impacts in that area is political instability. If we are seeking to sell more goods—and, in particular, services—overseas, where we might be looking at signing 10 to 20-year contracts, undoubtedly, long-term constitutional instability and risk would be factors in trading deals going south of the border rather than being done with Scottish companies, which might fall out of tariff-free trade with countries with whom we have trade agreements.
I wonder whether Mr Hoy agrees that we should go further than that and recognise the opportunity to export to other markets in other regions of the United Kingdom as a platform for growth in exports to the rest of the world. That is the opportunity that Scotland has, and it is one that the current Government does not like to look at or seek to exploit.
Absolutely. Although I am not 100 per cent behind the concept of metro mayors, I have talked to metro mayors south of the border who are actively competing with one another for Scottish investment. That is the kind of culture that we would like to see in what is still a unitary state.
I commend Richard Leonard, who is also leaving the Parliament at the next election. I do not agree with much that he says, but his words are proof that Tony Benn is still with us, even though he has passed, and that idealist, misty-eyed Marxism is still alive and well on these benches. Even though we disagree on what the basis of free trade should be, I commend him for recognising that the SNP Government’s six-point plan is not fit for purpose.
Emma Harper talked about the impact of tariffs and trade barriers on the food and drink sector, and she referenced Annandale Distillery, which I will visit next week. However, we cannot escape the simple fact that imposing a trade barrier between Gretna and Carlisle would do undoubted damage to the economy not just of the south of Scotland but of the whole of our country.
Gordon MacDonald was quite right to deploy the statistics that he did. He mentioned data in relation to goods but, if he were to recast his speech to include services, the statistics would paint an entirely different picture.
Trade is an opportunity for growth. If we look to the near horizon of the Scottish budget, we can all see that growth is what the Scottish economy badly needs. Despite their rhetoric and their vain attempt today, we know that SNP members are no real friends of trade. Time and again at Westminster, the SNP has voted against free trade agreements. As we said earlier, it will be interesting to see what it will do in respect of the India free trade agreement. If it votes against that, it will effectively vote against tariff-free access for Scotch whisky to that huge potential market.
An illogicality runs through the Scottish Government’s position. It effectively says that it wants to remove us from an open and free market—where we do 61 per cent of our trade and we are a net beneficiary fiscally—to take us into a market where we do only a third of that trade and would be expected, from the get-go, to be a net contributor fiscally. It makes absolutely no sense to argue to remove us from the UK if that would only take us back into the EU.
The truth of the matter is that British exports are rising while Scottish exports are declining. That is the harsh reality of the situation, and that is why we probably want to rely on external commentators rather than on ourselves. It is no wonder that London School of Economics researchers have argued that
“Rejoining the EU cannot make up for the income lost to independence”
and that
“rejoining dismantles the barriers created by Brexit”—
and I accept that there are barriers there—
“only to erect them again at the border with the rest of the UK.”
There is another issue, which is that rejoining the EU would mean that we simultaneously turn our back on the free trade agreements that have been made since Brexit. That would mean, for example, losing the blanket 10 per cent tariff with the US and entering an EU trading arrangement, where tariffs are 15 per cent. I am absolutely certain that the First Minister did not discuss that when he donned his “Make America Great Again” hat and entered the Oval office.
It is also important that we look beyond the slow-growth markets of Europe and towards the tiger economies of Asia Pacific. That is why the most recent Conservative Government worked so hard to deliver a comprehensive and progressive agreement on the trans-Pacific partnership, which gives us membership of a vast trade area spanning the Indo-Pacific region. When the minister speaks, perhaps he could explain why the Scottish National Party did not vote at Westminster for access to those markets. The bloc is home to more than 500 million people and will have a total GDP of £11 trillion when the UK joins. Joining the bloc has boosted the Scottish economy by improving access to some of the world’s largest markets. For example, we will be removing 80 per cent of tariffs on UK exports of whisky to Malaysia over the next 16 years. We can access new and dynamic markets overseas—that is what the principle of free trade is all about.
On the basis of what we have heard from the Scottish Government today, it will have to do much better than it has done in recent years if it is to drive up trade and make Scotland a global powerhouse. That will require a mind shift and a gear shift, and it will require the small number of SNP MSPs who are truly committed to free markets and open trade to stand up and speak out.
I add that it is nice to see at least one Green member in the chamber. The Greens were notably absent from a debate about trade—the very trade that raises the tax to pay for the public services that we all want.
16:51
I welcome the debate, because it is important to discuss Scotland’s exports. I note that Opposition spokespeople started off on cordial notes by paying lovely tributes to my colleague and friend Kate Forbes, the Deputy First Minister. Of course, those tributes are well deserved. I also note that not one person said that they would miss me when I am gone. I will not take that personally, even though I did not even notice that they ignored me. That was not a plea for sympathy.
Can I say how much the minister will be missed in the chamber when he goes? He has Scotch whisky interests in his constituency, so I hope that he, too, can be a voice of reason for that industry and that, between now and the election, he opposes any measures to introduce further restrictions on alcohol marketing and sponsorship.
I am enjoying this, Presiding Officer, and I am happy to take an intervention from Daniel Johnson.
I am grateful—I will miss you, too.
As you are clearly speaking through the chair to me, I thank you, Mr Johnson.
I feel so much better now, Presiding Officer, and I am happy to proceed with my speech.
There were times when the debate descended into speeches about defence, which I thought was rather unfortunate. As Kenny Gibson referred to, the Tories are not in a great position to say that they are champions of the defence sector. I am the MSP for Kinloss, which David Cameron effectively shut when he came to power in 2010, causing misery for families and hundreds of households in my constituency and wasting billions of pounds of public money. The Tories are certainly not in a position to champion the defence sector.
I am grateful to Mr Lochhead for giving way. I will miss him, too, for the record.
Has the minister completely missed the massive investment that there has been—and continues to be—in RAF Lossiemouth in his constituency, which is supporting jobs at the base?
Seeing as the minister has raised defence, I go back to the question that I posed earlier. Why is it that, in the motion from the Scottish Government, in the Deputy First Minister’s speech and in the 18-page document, which is full of lots of lovely illustrations, there has been not a single mention of defence? I see that the Deputy First Minister has just passed you a helpful note.
Through the chair, Mr Fraser.
In my initial intervention, I made clear the support that this Government has provided for the defence sector in Scotland, which we value greatly. A trading nation is about international exports, and that will involve aerospace, space, defence and a number of other sectors that I will come to as I progress with my remarks.
It is important that Scotland supports exports. We are a smaller nation of 5.5 million people and, like our counterparts around the world, we therefore have an extra reliance on exports if we want to grow our economy as a country. That is why this is such an important agenda for Scotland’s future and economic growth. We know that exports lead to companies growing fast and making greater profits. Companies that export perform better. That is why we want to promote exporting to more companies in Scotland.
It is also important to say that we want more women-led companies to export. I recently commissioned the “Gender export gap in Scotland” report, which estimated that Scotland’s trade could increase by between £3.4 billion and £10.3 billion over two years—think of that—if women-led businesses exported at the same rate as those that are led by men. That is why we are taking action to introduce more targeted trade missions for women, training programmes and so on. A working group on that is up and running. I welcome the fact that Scottish Chambers of Commerce, as I saw on social media, recently led an all-women delegation on a trade mission—I think it was to Brussels. I warmly welcome that.
Fresh statistics were released this morning on the state of exports. I remind members that exports in Scotland are worth £24.1 billion at the moment—that only covers goods, as is the case with HMRC statistics. It represents an increase in value of exports over the past year of 6 per cent. At the same time, the UK has experienced only a 1 per cent increase in the value of exports over the past 12 months.
EU statistics show exports of £8.4 billion to the EU. That is a real-terms reduction of 5 per cent over the past year. Indeed, since 2018, that is, before the pandemic, the decline in EU exports from this country is 21 per cent in real terms—remember that the EU is our biggest market. For those who are arguing in the debate that Brexit has had no impact on Scotland’s exports or on Scotland’s businesses and their track records, please pay attention to the statistics, which speak for themselves. Northern Ireland, which has arrangements to export to the single market, has seen exports rise. That is no coincidence; it is because it has access to the single market of Europe, and we, of course, do not.
I will make two important points. First, the plan was produced after Brexit, that is, in 2019, which somewhat diminishes some of those points. Secondly, and more importantly, does he recognise that the plan has had only two updates—one in 2022 and one that has just been published? Given the numbers that are flying around, does the minister consider that we need more regular updates on the plan and on how we are progressing against the very solid numbers that were set out in 2019?
I am very keen to find ways to have regular updates. We largely rely on HMRC data on goods exports. There are calculations that we can make, but there is sometimes a time lag, which is why we cannot always give the updates that we would prefer to.
The “A Trading Nation” document that was updated, refreshed and published this morning says that, despite the headwinds that have been caused by Covid, Brexit and, of course, the war in Ukraine, Europe and North America remain key markets for Scotland. The US is the single biggest country that we export to, and the EU is the biggest market that we export to—it is very important to keep that distinction in mind. Trade with the middle east and Asia is also offering strong potential. We have added special interest markets to our existing top 20 markets to give us flexibility to engage with fast-growing emerging markets such as Brazil, Mexico, Indonesia, Singapore and South Korea. We are proud to have added Ukraine as a special interest market, allowing our enterprise agencies and all our partners to support bilateral trade in Ukraine’s hour of need.
I return to some of the challenges and global headwinds that our businesses face when it comes to exporting around the world. Brexit has had huge ramifications for Scotland’s businesses. As I have said before, I often meet small businesses, particularly in Scotland, that do not export to Europe any more because of Brexit. We welcome the non-EU trade deals that have been referred to by Opposition members in the debate, and there is an exciting opportunity in the Indian market, particularly for whisky, as has been mentioned by others.
Despite that, Scottish GDP will take a hit of 2 per cent because of Brexit, costing this country more than £4 billion. One member is shaking his head, completely denying the link between Brexit and this country’s export performance in international trade—it beggars belief.
We now also have the issue of tariffs with the US. As we saw this week, the First Minister is leading from the front and has taken on the case of whisky, in particular. It is not the only sector that is affected, but the impact on whisky is huge, at £4 million a week. The First Minister took that case directly to his engagement with the US President in America. The US whisky market is huge, so we must break that down, as well.
I pay tribute to team Scotland. We have trade envoys, GlobalScots, Scottish Government offices and Scottish Development International offices. We have the fantastic performance of Scottish Enterprise, as the Deputy First Minister said, which is achieving record-breaking additional export sales for the companies that it is working with.
We have so many people out there with good will for Scotland. We have a strong brand and strong products. Scotland is responsible for the biggest UK food export in Scottish salmon and the biggest UK drink export in the form of Scottish whisky. We have exciting high-growth sectors in this country that are export dependent, and they are fast-growing economic sectors for this country, as well.
We have a lot of optimism when it comes to growing exports in the years ahead, but we have to overcome some of the obstacles that we have spoken about today. I commend the motion to the Parliament.
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