Tag: Economy

What did we learn from the Scottish Government’s Medium Term Financial Strategy?

THIS week the Deputy First Minister and Cabinet Secretary for Finance Shona Robison presented her first major fiscal statement to parliament (writes Fraser of Allander Institute’s MAIRI SPOWAGE).

For the uninitiated, the Scottish Government’s Medium Term Financial Strategy (MTFS) is a document that outlines its financial plans and priorities over the next five years. The strategy aims to provide a framework for fiscal decisions, resource allocation, and economic management in Scotland. It takes into account various factors such as economic forecasts, revenue projections, spending priorities, and the government’s policy objectives.

The MTFS was introduced following the Budget Process Review Group’s final report, which recommended a number of changes to the budgetary process at Holyrood so the parliament could move to year-round budgeting. The idea is that this sets out the context at this time of year, to allow Committees to plan their pre-budget scrutiny in the Autumn, feeding into the Budget which comes towards the end of the year.

It’s fair to say that this hasn’t always looked like a particularly strategic document: perhaps in the past setting out possible challenges, without engaging with what might need to be in response. It is clear from what the DFM said yesterday that she is trying to highlight and engage with the challenges to outlook presents, which is to be welcomed.

A chunky document at 117 pages – we’ve read it so you don’t have to!

Funding Commitments are outstripping the funds available

The big headline from the MTFS is that public spending in Scotland is currently projected to outstrip the funds available by significant amounts of money from the next fiscal year (2024-25). The document says:

Our modelling indicates that our resource spending requirements could exceed our central funding projections by 2% (£1 billion) in 2024- 25 rising to 4% (£1.9 billion) in 2027-28.

The funding gap has been presented in the media this morning using that dreaded phrase “black hole”. Of course, this gap cannot be allowed to manifest itself in reality. For context, this £1 billion gap is bigger than the whole of the Rural Affairs and Islands budget; or about the same as we spend on prisons and courts combined.

Given the Scottish Government has to present a balanced budget, and if the funding coming from both Westminster and devolved taxes is as expected, what this means in practice is that difficult decisions are going to have to be made about spending. Of course, there are also options to raise taxes  – but let’s come back to that.

Opposition politicians were quick to criticise the Government for saying that they were prepared to take tough decisions to deal with this challenge – but not setting out what these tough decisions were, i.e. where the axe might fall if it needs to.

To be fair, this is not the first one of these documents to highlight a potential funding gap if things continue as they have been. The difference was that DFM was very upfront about the fact that this was going to mean tough decisions were necessary. The financial statement yesterday was not a budget, and we should not have expected detailed allocation announcements.

So while we can see the uncertainty that this causes for service providers in terms of what is coming in December, to a certain extent the MTFS has done what it is supposed to do: to set the context for the start of the year-round budgeting process in Holyrood.

However, having said that, there are a number of commitments the Government has already made that are not included in this – such as the expansion of childcare provision, or further investment in the National Care Service. Therefore Ministers will have to be clear over the Summer and in the Programme for Government that they are acknowledging the tough decision environment when policy announcements are being made.

The DFM was fond of saying to opposition parties that they need to set out where cuts should happen if they are asking for more to be spent on particular areas – therefore the Government needs to hold themselves to the same standard.

A large income tax reconciliation still looks likely – but won’t be confirmed until the Summer

One of the issues that is contributing to the difficult outlook for the next financial year is a large income tax reconciliation.

To explain what this means, I’ll hand over to the Scottish Fiscal Commission (our boldening)…

When the Scottish Budget is set, funding from Scottish income tax for the financial year is based on forecasts and does not change during the year. Only when outturn information on income tax revenues becomes available is funding brought in line with outturn and a reconciliation applied to the following Scottish Budget. We can derive indicative estimates of future income tax reconciliations by comparing our latest forecasts and the latest forecast Block Grant Adjustments (BGAs) to those used in the Budget setting forecasts.

As we have highlighted in recent publications, we continue to expect a large and negative income tax reconciliation for the Budget year 2021-22. Comparing our and the OBR’s latest forecasts indicates a large negative reconciliation for 2021-22 of -£712 million. Final outturn data should be available in July 2023, with the resulting reconciliation being applied to the Scottish Budget for 2024-25.

So, we will know in July to what extent this reconciliation emerges in practice. This feature of the operation of the fiscal framework highlights the complexity of the arrangements that now determine the Scottish Budget.

Some of the coverage of this reconciliation have been characterised (by the IFS on socials for example) as a result of “over-optimism on tax receipts”. Let’s break down what is causing the reconciliation.

The forecasts for which the 21-22 budgets were set were still in the middle of the pandemic (Jan 2021), and the reconciliations are a function of both the view of the OBR of the rest of UK tax receipts and the SFC’s view on Scottish Income tax. Both of these figures were quite far out (the OBR’s more than the SFC’s) but it is absolutely to be expected given the uncertainty.

So, the current view of Scottish Income Tax is that it will be 9% higher than was forecast at the time of the 21-22 budget; but the current view of the Block Grant Adjustment is that it will be 15% higher than was forecast at the time of the 21-22 budget, hence the negative reconciliation.

To characterise this situation as “over-optimism” doesn’t seem very fair.

The outlook for the public sector workforce is assumed to be quite different in the document compared to the Resource Spending Review last year

When the Resource Spending Review was presented in May 2022, one of the main things that stood out was the analysis of the public sector workforce. The suggestion was in aggregate that the public sector workforce had increased significantly over the period of the pandemic, and that one of the ways that the tight fiscal environment could be dealt with was to manage down the public sector to its pre-pandemic size.

What wasn’t set out last year, or indeed anytime since, was how this would be achieved and in which areas the workforce would be managed down.

The MTFS does present different scenarios for the evolution of public sector pay settlements and the size of workforce. However, none of these assume that the public sector is to reduce overall. The scenarios the government examines in the document are:

  • Low Scenario – 2% pay award in 2023-24, and 1% pay award from 2024-25 onwards, 0.3% workforce growth
  • Central scenario – 3.5% pay award in 2023-24, and 2% pay award from 2024-25 onwards, 1.1% workforce growth
  • High Scenario – 5% pay award in 2023-24, and 3% pay award from 2024-25 onwards, 2.2% workforce growth

The document still indicates that reductions may be required in some areas of the public service, but it seems clear that this will be driven by the budget allocations that will be dished out:

Where a reduction in workforce is required for a public body to remain sustainable, we would expect this to be through natural turnover wherever possible and we restated our commitment to no compulsory redundancies in this year’s Public Sector Pay Strategy.

Let’s talk about talking about tax

The Deputy First Minister has announced that an external tax stakeholder group will be established this Summer. The document says:

This group will build on the Government’s inclusive approach to tax policymaking and will consider how best to engage with the public and other stakeholders on the future direction of tax policy, including whether a “national conversation” on tax is required.

It is hard not to be cynical about this announcement: those of us in the tax policy field have been invited to many conversations and round tables about tax over the years, but engagement is only meaningful if feedback and suggestions are taken on board. This sounds a little like a group to talk about how to talk to the public about tax. Not bad in itself, but it’s not clear how this is going to feed not many of the announcements that have already been made about taxation by this refreshed administration.

The idea is that this engagement will shape a refreshed tax strategy from the Scottish Government. A couple of things that we would say (if we are asked of course!) –

  • Discussions about wealth taxes look very difficult in a devolved context. However, completely within the gift of the Scottish Government is the reform Council Tax, something the SNP have said they wanted to do since coming to power in 2007. Given the number of commissions and groups that have discussed this over the years, another one is not required to set out the issues with CT, or indeed to set out options for replacement. Meaningful discussions about replacements and the political bravery to recognise there will be losers, as well as winners, will be required.
  • Further additions to the higher and top rates of income tax are unlikely to be able to yield large amounts of revenue. For example, there is the suggestion from the new FM (which had been put forward by the STUC) to introduce a new band at 75,000 and up the rate by 2p. The new ready reckoners published by the Scottish Government yesterday show that even if the whole of the Higher Rate Tax band is upped by 2p, this will raise £176m – not an insignificant amount of money, but not enough to deal with the funding gap outlined in the MTFS.
  • Tax rises are not cost-free. If engagement is to be meaningful, it is important that the SG engage with those who can see some of the costs as well as the benefits to either (i) more complexity in the tax system (ii) more divergence from the rest of the UK and (iii) higher tax burden overall.

Multi-year Funding envelopes will be set out with the 2024-25 budget (so probably in December)

The Government have committed to publish refreshed multi-year spending envelopes alongside the Budget for 2024-25. Given everything that has changed since the Resource Spending Review was published in May 2022, this is to be welcomed – although given the difficulties overall it is unlikely to be good news for many areas.

Hello? Is it MSPs you’re looking for?

Given the importance of the statement yesterday, we were quite surprised at both the time the was given in the chamber but mostly by the lack of MSPs who were in the chamber to hear the statement.

This is basically the equivalent of the Autumn Statement at Westminster – not the budget, no, but it gives clear signals of the context for the budget to come. This sets off the Budget process, and highlights that really difficult decisions are going to have to be made in the 2024-25 budget.

Engagement from across the chamber will no doubt increase as we get to the sharp end of the budget process – let’s hope it’s more meaningful than it was yesterday.

Coronation weekend boosts spending for Scottish businesses

Bank of Scotland data from customer spending habits in the food and drink sector during the week of the King’s Coronation 2nd – 8th May shows: 

·         A 10% increase in spending in Scottish firms including pubs, bars, cafés and restaurants compared with the previous week 

·         The Coronation generated bigger consumer spending levels in Scotland than the Queen’s Platinum Jubilee in 2022 (10% vs 3% respectively) despite the Coronation only being a three-day compared to the four-day Jubilee  

·         Across the UK biggest increase in business activity was seen by restaurants (12% increase) followed by supermarkets and grocery retailers (nine percent increase)  

The Coronation Bank Holiday weekend led to a flurry of consumer spending in Scotland, helping to boost business activity.  

Consumers in Scotland increased their spending more than any other UK nation or region as business reported a 10% rise in trading activity over the bank holiday compared to the previous week. 

Data scientists at Bank of Scotland found the additional Bank Holiday for the King’s Coronation increased Scottish spending by a greater amount than the Queen’s Platinum Jubilee four-day-weekend last year which drove a 3% increase in purchases across firms.  

Restaurants in the UK received the biggest boost in business activity, with customers spending 12% more than in previous weeks, followed by supermarkets and grocery retailers who saw a nine per cent increase. 

Day by day analysis of the UK shows that the biggest increase in spending was restaurants on Sunday and Monday by 37% and 51% percent respectively.  

Chris Lawrie, area director for Scotland at Bank of Scotland Commercial Banking: “It’s fantastic to see the boost the extra day’s bank holiday has given to businesses, many of which will be hoping for a similar surge in demand for the next bank holiday and into the summer.  

“Managing cash flow and juggling busy periods can be challenging for firms, and for larger businesses leveraging tools such as invoice or asset-based lending can be useful to unlock capital when needed, enabling them to seize the opportunities that come their way.

“As well as wisely investing their hard-earned additional revenue into training and overall efficiency gains which will benefit the business in the long term.” 

Another rate rise and what is going on with the fiscal framework review?

FRASER OF ALLANDER WEEKLY UPDATE

The big economic news this week was undoubtedly the 12th consecutive rate rise from the Bank of England (writes Fraser of Allander Institute’s MAIRI SPOWAGE). The Bank have done this to continue to bear down on stubbornly high inflation, which is still in double figures at 10.1% (latest data for March).

The Bank’s outlook for the UK economy has improved considerably since their last set of forecasts were published in February. Broadly in line with the Office for Budget Responsibility, they now think that the UK economy will overall be flat in the first half of 2023 before returning to growth in the second half of the year.

The Bank are forecasting 0.7% growth in 2023, followed by 0.8% growth in 2024. It is worth highlighting though that this figure for 2024 is pretty anaemic, and below the current forecast from the OBR for the same period.

The Bank’s expectations are still for inflation to fall sharply from April, in part as the high price levels from a year ago come into the comparison. The next data are out on 24th May: let’s see if the economists are correct this time, as to be fair we’ve all been expecting the rate to fall below 10% for some months now.UK

Economy grows in Q1

Today, we got data from the ONS that confirms that the UK economy grew during the first quarter of the year, albeit by only 0.1%. That is balanced out with the news from the monthly data that there was a contraction during March, with wholesale and retail contributing the most to this contraction. This could suggest that the wider economic conditions are starting to bite on consumers, so it will be interesting to see how this is reflected in next month’s data.

Reports about talks about talks

Officials from the Scottish Government and HMRC were at the Public Audit Committee this week to give evidence about the administration of Scottish Income Tax. This session, as one may expect from the Public Audit Committee, was on the technical details of the collection of the tax (which, while partially devolved, is collected by HMRC rather than Revenue Scotland) and also the audit arrangements for the tax collection.

There were some interesting nuggets in there from a tax policy perspective. There was the view of the Scottish Government on the reasons for Scottish Income tax lagging behind the rest of the UK: mainly laid at the feet of the decline in oil and gas jobs: but there didn’t seem to be much clarity on whether we would ever be able to analyse whether this was actually the case.

We also heard that the fiscal framework review has moved “back into an active space”. For those who are after a recap of what on earth this is all about, see our blog in late 2021.

Slightly depressingly, as the PAC Convener Richard Leonard characterised it, this review is currently in the status of “talks about talks”. It is still very unclear when this may be concluded (or even start). Hopefully, we’ll see some news about this from both Governments soon.

Fraser of Allander Weekly Update – Bitter pill to swallow?

This week, the Chief Economist of the Bank of England, Huw Pill, generated many headlines when he said that “we’re all worse off” due to the stubbornly high inflation the economy is experiencing – and bluntly, that we all just need to accept that (write MARI SPOWAGE and EMMA CONGREVE) .

Given this follows on from Governor Andrew Bailey’s comments that people shouldn’t ask for pay rises, it adds a bit to the narrative that the Bank of England is a bit tin-eared to the way workers and households feel right now.

However, Pill’s comments are a reflection of the current outlook. Even with the more optimistic forecasts that we had from the OBR recently, meaning that a recession may be avoided, living standards are still projected to fall significantly over the course of 2023.

It is important though that we have a debate about who in society should bear the brunt of the costs we are experiencing, and whether indeed it is ever going to be possible to protect much of our society from these external shocks.

No sign of a recession… yet

On a more optimistic note, data published this week showed that the Scottish economy grew by 0.2% in February 2023, which follows on from growth of 0.5% in January. Services grew by 0.4%, and particularly encouraging was that consumer-facing services grew by 1.3%.

This means it looks like Q1 2023 is going to show some growth, rather than a contraction as many (including us) had feared.

It will be interesting to see how the economy evolves as we move past the end of March, when we know government support for energy bills started to wind down, particularly for businesses.

How does Scotland compare to other regions of the UK?

ONS have published their latest data on regional economic activity – which you can get split up by all sorts of levels of geography, including local authority and city region, and by industry.

This data allows us to compare the level and type of economic activity across the UK, for the year 1997-2021. Looking across the 12 regions of the UK, known as International Territorial Level (ITL) 1 Regions, we can see that economic activity in London far outstrips that of the other region of the UK. Scotland usually performs pretty well on these metrics, generally 3rd or 4th in the UK depending on the year.

Chart: GVA per head, ITL 1 Regions

Source: ONS

[As statto aside, this is “onshore” Scotland only. Aficionados of economic statistics in the UK will be aware that activity associated with the whole UK Continental Shelf is put into a 13th region called “extra-regio”, which also includes activities in embassies abroad.]

There are also significant differences between different local authorities within Scotland, with the main cities outperforming many other areas of the country. We have to remember of course that the economic activity data reflects where activity takes place – i.e. the location of the place of employment – rather than where people live, so there is a significant commuting effect associated with this data.

Chart: GVA per head, local authority

Source: ONS

Despite another instalment in the long running NCS saga, we still have no certainty over what, when or how much

Last week, it became clear that the National Care Service legislation (and by extension its delivery) will be pushed back (again). In a letter to the Health, Social Care and Sport Committee on the 17th April, the Minister stated that the Scottish Government would be seeking parliamentary approval to extend Stage 1 of the Bill till after the summer recess.

We have written before on some of the questions that remained following the introduction of the Bill and the accompanying Financial Memorandum. The Finance and Public Administration Committee shared many of our concerns (and had others) about the lack of detail in the Financial Memorandum and asked the Scottish Government for an updated version. The Convenor of that Committee, Kenny Gibson, wrote to the Minister this week noting that the Committee are becoming:

“increasingly concerned at the lack of information available on the financial implications of the Bill and frustrated that we have still not received the updated FM we requested back in December last year”

They have asked for a new Financial Memorandum no later than Friday 12 May along with a breakdown of spend to date on the NCS.

The importance of the NCS to those who work and draw on social care, and to wider society, is huge. Although there remains a difference of opinion on how reform should happen, all agree that reform is needed. The delays that we have seen with the programme to date have been concerning. Understanding the financial implications of what this all means has been nigh on impossible. This call for clarity is welcome.

Shona Robison: A fair economy supporting Scotland’s people

Deputy First Minister outlines priorities for sustainable growth

Fair work and more efficient public services will be at the heart of Scotland’s economy, Deputy First Minister Shona Robison pledged today.

Plans to deliver real benefits to the people of Scotland through a strong, green economy, underpinned by the most progressive tax system in the UK, are outlined in the Scottish Government’s Portfolio Prospectus which pledges firm actions to be achieved by 2026.

These include:

  • creating the UK’s most progressive tax system to deliver public services, tackle poverty and grow the wellbeing economy
  • increasing the number of workers earning at least the real living wage, while narrowing the gender pay gap
  • making Scotland a leading European start-up nation, in which more businesses are created and grow to scale
  • growing international exports while diversifying into new markets
  • laying foundations to produce 5 Gigawatts (GW) of hydrogen production by 2030, as part of a Scottish hydrogen supply chain
  • implementing a New Deal for Local Government, including a fiscal framework, to tackle collective challenges and improve outcomes

The Deputy First Minister was joined by Wellbeing Economy Secretary Neil Gray on a visit to Dear Green Coffee Roasters in Glasgow – a company based on fair work principles and sustainability which embodies the vision for a wellbeing economy.

Ms Robison said: “The Scottish Government’s Policy Prospectus lays out the practical measures we will take to transform the economy, deepen our relationship with business and maximise the value of our public spending.

“Developing a wellbeing economy is not just good social practice, it makes sound economic sense. By focusing on strong public services, we can help disabled people, the long-term sick and those with caring responsibilities to get back into work. While paying a fair wage, and reducing the gender pay gap, can produce a committed workforce which in turn will help increase productivity and improve staff retention.

“We will work in partnership with local government to update the way it is financed and improve collaboration. Underpinning this will be stable, sustainable public finances delivering people-focused public services and supporting Scotland’s net-zero goals.

“Our resources will be focused where they can have the maximum impact, such as laying the foundations of a hydrogen supply chain and supporting internationally competitive green technologies, health and life sciences and advanced manufacturing.”

The Scottish Government’s Policy Prospectus is based on three missions: equality, opportunity and community.

Royal Bank of Scotland Report on Jobs

Hiring activity across Scotland falls again in March

  • Permanent placements fall for second month running
  • Further marked drop in supply of permanent labour
  • Pay pressures moderate but remain strong overall

The latest data from the Royal Bank of Scotland Report on Jobs survey signalled a fall in permanent staff placements across Scotland for the second consecutive month in March.

The reduction was fuelled by ongoing economic uncertainty, which resulted in increased hesitancy among companies to commit to new hires. Additionally, temp billings fell for the sixth month running.

In terms of labour supply, there was a further sharp fall in the number of candidates for permanent vacancies, while temp staff availability fell at the weakest pace in the current 25-month period of contraction. At the same time, growth of demand for permanent staff moderated in March, with vacancies rising at the slowest pace in just over two years.

Furthermore, demand for temp workers contracted for the third consecutive month. In terms of pay, pressures on starting salaries and wages remained marked, partly due to the cost-of-living crisis, but also competition for workers amid ongoing labour shortages.

Downturn in permanent staff hires softens from February

Permanent placements across Scotland fell for the fifth time in the past six months in March. According to recruiters, the latest downturn was largely driven by economic uncertainty and hesitancy to commit to new hires.

While the rate of contraction across Scotland moderated notably from February, it was stronger than that recorded for the UK as a whole.

A sixth straight monthly decline in temp billings was reported across Scotland in March. That said, the respective seasonally adjusted index picked up from February’s 32-month low, indicating the softest decrease in billings since December last year.

However, at the UK level, temp billings continued to increase and at the quickest pace since September 2022.

Marked contraction in permanent staff supply

A further drop in permanent labour supply was recorded across Scotland in March, thereby stretching the current run of contraction to 26 months. The pace of decrease was broadly similar to that seen in February and stronger than the series average. According to anecdotal evidence, fewer permanent candidates were available partly due to economic uncertainty and the subsequent reduction in active job seekers.

In contrast, the UK as a whole recorded the first rise in permanent labour availability in over two years, albeit one that was mild overall.

March data revealed a fractional drop in temp staff availability across Scotland. Notably, the pace of contraction moderated further from December last year and was the weakest seen in the current 25-month sequence of reduction. A preference for permanent positions and hesitancy to switch roles reportedly weighed on availability. However, fewer work opportunities and the completion of projects helped to improve short-term labour supply in some areas.

Meanwhile, the availability of candidates for temporary vacancies at the UK level increased for the first time in 25 months.

Growth in starting salaries moderates, but remains rapid

Salaries for new permanent hires rose rapidly across Scotland in March. Competition for skilled staff, the cost-of-living crisis and labour shortages were said to have driven up salaries. While the rate of inflation was stronger than the historical and UK-wide averages, the pace of growth was the softest seen in 23 months.

March data pointed to a sharp rise in hourly wages for temporary workers across Scotland, thereby extending the current run of growth to 28 months. While the pace of temp wage inflation intensified from February, the upturn was among the weakest in the aforementioned sequence, and broadly in line with the historical average.

The pace of wage growth across the UK as a whole was quicker than that seen for Scotland.

Softer upturn in demand for permanent staff

Permanent job openings grew solidly across Scotland in March. However, the latest upturn was the softest seen for just over two years and weaker than that at the UK-wide level.

Of the eight monitored sectors, Nursing/Medical/Care saw the strongest upturn in permanent staff demand, with IT & Computing ranking second.

Demand for temporary workers across Scotland fell for the third month running in March. The rate of contraction was marked overall, and contrasted with a modest increase in temp vacancies across the UK as a whole. 

The steepest drop in temp staff demand was seen for Blue Collar roles, followed by Executive & Professional.

Sebastian Burnside, Chief Economist at Royal Bank of Scotland, commented: “March data revealed a further decline in hiring activity across Scotland, as ongoing economic uncertainty weighed on firms’ appetite for new staff.

“Moreover, with growth in permanent vacancies weakening further, and temp vacancies falling for the third month running, it appears unlikely that recruitment trends will improve much in the coming months. Nevertheless, despite the slowdown in hiring, pay pressures remained acute.

“This was in part fuelled by the cost-of-living crisis, but also increased competition for scarce candidates.”

Supporting Scotland’s women entrepreneurs

Report identifies 31 ways to reduce gender gap and boost economy

The Scottish Government will carefully consider proposals to support more women into entrepreneurship, First Minister Nicola Sturgeon has said following publication of a wide-ranging independent review.

Pathways: A New Approach for Women in Entrepreneurship was commissioned by the Scottish Government to identify ways to unlock untapped potential, close the gender gap and boost Scotland’s economy.

The review – led by Ana Stewart, an entrepreneur and investor, and co-authored with Mark Logan, chief entrepreneur to the Scottish Government – makes 31 recommendations. The steps include:

  • providing start-up training and support in a range of pop-up locations to help more women, and other primary care givers, access services
  • integrating entrepreneurial education into schools and further education
  • clarifying existing access pathways into entrepreneurship
  • improving access to start-up and growth finance
  • tracking and measuring progress towards full representation in entrepreneurship

Commenting on the report,  First Minister Nicola Sturgeon said: “I welcome Ana Stewart and Mark Logan’s work in delivering a powerful review of the barriers facing women in entrepreneurship in Scotland and presenting a compelling set of recommendations aimed at removing them.

“The review’s findings are challenging but underline the need to tackle the root-causes, as well as the immediate barriers, of this inequality.

“Fully realising the entrepreneurial potential of women in Scotland will not only promote greater equality in our society, it will also deliver significant benefits for the economy. 

“The Scottish Government will respond quickly to the review as a whole, and its recommendations.”

Review chair Ana Stewart said: “This review has, through a combination of extensive stakeholder engagement and robust data analysis, revealed that women face many significant barriers to entrepreneurship.

“Only one in five businesses in Scotland are female-led, while start-ups founded by women received only 2% of overall investment capital in the last five years. By taking a root cause and effect approach, our recommendations focus on dramatically increasing female participation rates to drive a vibrant and fairer entrepreneurial economy.”

The First Minister welcomed the publication of the review on a visit to Roslin Innovation Centre, where she met Ishani Malhotra, Chief Executive of Carcinotech, and Dr Kate Cameron, who founded Cytochroma.

Read the review report, Pathways: A New Approach for Women in Entrepreneurship.

pathways-new-approach-women-entrepreneurshipDownload

Scottish private sector remains in downturn in January

  • Private sector activity falls at a quickened pace in January
  • Downturn in new orders extends to seventh month
  • Marked drop in service sector new business

The Scottish private sector reported a further fall in total activity during January according to the latest Royal Bank of Scotland PMI® data.

The Business Activity Index – a measure of combined manufacturing and service sector output – fell from December’s five-month high of 48.3 to 47.1, signalling a quickened contraction in private sector output, and extended the current run of contraction to six consecutive months.

The rising cost of living, supply chain disruptions and a slowdown in the housing market all contributed towards the latest downturn in activity.

At the sector level, January data revealed that service firms led the decline, registering faster rates of reduction in both business activity and new orders compared to their manufacturing counterparts.

New business received across the Scottish private sector posted a further contraction in January. Moreover, the pace of decrease quickened from December’s three month low, signalling a sharp reduction in new work.

The downturn was led by a faster fall in new business received at service providers, while goods producers reported the softest decline in eight months. A slow housing market, transport strikes and squeezed disposable incomes were all in part blamed for the drop in new orders.

Of the 12 monitored UK regions, Scotland registered the sharpest pace of contraction in incoming new business.

After weakening for the second month running, business expectations across Scotland improved during January and printed a six-month high. Optimism largely stemmed from anticipation of new projects and increased activity. That said, the latest reading continued to post below the survey average as worries over the war in Ukraine, energy crisis, slowdown in the real estate sector and the cost-of-living crisis weighed on growth expectations.

Additionally, business sentiment across Scotland registered the third-weakest in the UK, ahead of Northern Ireland and the North East of England.

For the second month running, workforce numbers contracted across the Scottish private sector in January. The rate of job shedding was modest overall and only fractionally quicker than that seen in December. Where a drop in employment was noted, firms cited resignations, redundancies and retirements.

The drop in workforce numbers across Scotland contrasted with the no change seen at the UK-level.

The levels of unfinished work fell during January across Scotland’s private sector, thereby extending the current trend seen since last June. Moreover, the respective seasonally adjusted index ticked down from December’s four-month high, signalling the fastest rate of depletion in the aforementioned sequence. According to anecdotal evidence, lower orders allowed firms to work through previous contracts.

The rate of backlog depletion across Scotland was the fastest of all the 12 monitored UK regions.

Firms across Scotland’s private sector recorded a sharp rise in prices during January, thereby stretching the current run of inflation to 32 months. While the rate of incline measured the softest since May 2021, the latest upturn was still marked and historically elevated. According to anecdotal evidence, the incline in input costs was linked to higher prices for raw material, energy and transport, inflation and higher wages.

The pace of input price inflation across Scotland was the second-softest among the UK regions, behind the North West of England.

Private sector firms across Scotland raised their charges for goods and services for the twenty-seventh month running in January. Though the pace of charge inflation slowed to a three-month low, it remained stronger in context of survey data. The rise in charges reflected increasing cost pressures.

Adjusted for seasonality, the Prices Charged Index for Scotland posted below the UK-wide figure.

Source: Royal Bank of Scotland, S&P Global

Judith Cruickshank, Chair, Scotland Board, Royal Bank of Scotland, commented: “The start of the year revealed that the downturn in Scottish private sector activity that began last August was extended into 2023.

“Moreover, the latest decline in private sector activity accelerated. It seems unlikely that the sector will bounce back anytime soon as services firms were severely impacted by the depressed demand conditions and the current economic climate.

“The step back in client activity has also resulted in firms trimming their workforce numbers for the second month running. Alongside an ongoing drop in the level of unfinished work, a further reduction in payroll numbers can be expected.

“However, the latest figures indicate that perhaps the worst of inflation has passed. Nonetheless, the current rates of input price and output charge inflation are still elevated and can be detrimental to the health of the Scottish private sector.”

UK economy risks collapse without urgent investment in nature

  • “There is no economy without nature” warns Dr Jeremy Leggett, ex Greenpeace Chief Scientific Advisor
  • Insurance companies, pension and investment funds are still financing fossil fuels – but urgently need to back nature recovery

The Green Finance Institute estimates that the UK is facing a finance gap of up to £97 billion to meet the UK’s nature-related targets by 2032. Without investment in climate mitigation, biodiversity restoration, flood prevention and other nature-related outcomes as outlined in public policy like the 25 Year Environment Plan, both our natural environment and economy face collapse.

Highlighting the urgent need for investment in nature, in the week that climate action group One Home reported that £600 million worth of homes are at risk of falling into the sea, Jeremy Leggett called on the UK’s financial sector to “step up or get washed away”.

Leggett, a former Chief Scientific Advisor to Greenpeace and founder of Solarcentury, one of the world’s most respected solar energy companies, is an experienced entrepreneur, who backed solar technology long before the government and financial institutions. Decades later, having proved his point with solar providing the cheapest energy available, he is now urging the financial sector to wake up to the facts and invest in the protection of nature.

“By continuing to invest in fossil fuels and related industries which destroy nature, institutional investors and many large funds are financing their own demise. There will be no business in a broken world. If big business does not invest in biodiversity and natural capital now, there will be no business.

He continued: “While the recent donation from Aviva of £38 million to the Wildlife Trust is a welcome development, donations are not a sustainable model for financing nature recover. Highlands Rewilding, and related projects, offer a new model for investment in nature-based solutions, with multiple revenue streams providing an economic and ecological return on investment.”

Having grown Solarcentury from a small South-London roofing company to a major international business deploying gigawatts of solar PV around the world, Leggett sold Solarcentury to Statkraft, which is owned by the Norwegian Ministry of Trade. But, rather than retire, Leggett invested his share of the proceeds – and raised more than £7 million – to start Highlands Rewilding, which currently owns two estates in Scotland.

“What we are doing here is opening up a pathway for businesses to finance nature recovery,” explains Leggett. “Humanity is at a tipping point which can go either way. Either we invest in the restoration of the natural environment, or we risk the complete collapse of civilization as we know it – including the economy.”

For the last few months Highlands Rewilding has been running a crowdfunding campaign, which has exceeded its initial target and raised over £700,000 from more than 400 individuals.

“Hundreds of citizens are helping to finance the vital nature recovery we so desperately need. But so far it is almost exclusively individuals who have stepped up to invest”, says Leggett.

“Government announcements, like the UK’s Ambitious roadmap for a cleaner, greener country, have pledged public money but the effort to halt biodiversity loss will need the backing of major investment funds, who are still sitting on the fence. The evidence is clear; Nature needs our help. But the major financial institutions are ignoring the warnings – and the opportunities.

“We saw it happen with renewables. Major finance was too slow to see the scale of the opportunity and too slow to come on board. Thankfully that situation changed but it took too long and we are living with the consequences. The situation is now even more urgent. Big business needs to back natural capital or the erosion of the economy will follow the same fate as the Norfolk coastline.”

Leggett is not alone in his assertions. Andy Howard, Global Head of Sustainable Investment points out that over half of global GDP, $44 trillion, is dependent on nature and its services, commenting: “The reality is stark: nature risk is fast becoming an integral factor to investment risk and returns”.

Dame Glenys Stacey, the chair of the government’s own Office for Environmental Protection commented that wildlife in particular was suffering “eye-watering” declines. “Species decline stands out – the rate of decline is inexorable,” she said. “This needs a lot of intervention, that is absolutely required.”

With the Treasury already stretched to its limits and further tax rises not compatible with the cost-of-living crisis it seems hard to imagine the government will be able to address the urgent funding gap at the required speed, or scale, to halt and reverse species decline. The only hope therefore is private sector finance and commercial capital.

In Scotland, Highlands Rewilding is performing a litmus test, entering the final quarter of its race to raise the required funds to scale nature recovery in Scotland. Their investment round is one of the first efforts after COP 15’s landmark biodiversity agreement, to break through the barrier of institutional finance.

The Four Es of economic growth and prosperity: Chancellor Jeremy Hunt’s speech at Bloomberg

ENTERPRISE EDUCATION EMPLOYMENT and EVERYWHERE

Good Morning

Thank you for that welcome, thank you all for joining us at Bloomberg.

From the way we communicate and collaborate, to the way we buy and sell goods and services, digital technology has transformed nearly every aspect of our economic lives.

How do I know that?

Because I too, just like Matt asked ChatGPT to craft the opening lines of this speech.

Who needs politicians when you have AI?

Like other countries, the UK has been dealing with economic headwinds caused by a decade of black swan events: a financial crisis, a pandemic and then an international energy crisis.

And my party understands better than others the importance of low taxes in creating incentives and fostering the animal spirits that spur economic growth.

But another Conservative insight is that risk taking by individuals and businesses can only happen when governments provide economic and financial stability.

So the best tax cut right now is a cut in inflation.

And the plan I set out in the Autumn Statement tackles that root cause of instability in the British economy.

The Prime Minister talked about halving inflation as one of his five key priorities and doing so is the only sustainable way to restore industrial harmony.

But today I want to talk about his second priority, to grow the economy. (In case you weren’t sure, I have them on the screen behind me.)

We want to be one of the most prosperous countries in Europe and today I’m going to outline the 4 pillars of our plan to get there.

Just as our plan to halve inflation requires patience and discipline, so too will our plan for prosperity and growth.

But it’s also going to need something else which is in rather short supply – Optimism, but we can get there.

Just this month columnists from both left and the right have talked about an “existential crisis,” “Britain teetering on the edge” and that “all we can hope for…is that things don’t get worse.”

I welcome the debate – but Chancellors, too, are allowed their say.

And I say simply this: declinism about Britain is just wrong.

It has always been wrong in the past – and it is wrong today.

Some of the gloom is based on statistics that do not reflect the whole picture.

Like every G7 country, our growth was slower in the years after the financial crisis than before it.

But since 2010, the UK has grown faster than France, Japan and Italy. Not at the bottom, but right in the middle of the pack.

Since the Brexit referendum, we have grown at about the same rate as Germany.

Yes we have not yet returned to pre-pandemic employment or output levels.,

But an economy that contracted 20% in a pandemic still has nearly the lowest unemployment for half a century.

And while our public sector continues to recover more slowly than we would like from the pandemic – strengthening the case for reform – our private sector has grown 7.5% in the last year.

Yes inflation has risen – but is still lower than in 14 EU countries, with interest rates rising more slowly than in the US or Canada.

And yes we have to improve our productivity. But output per hour worked is higher than pre-pandemic.

And last week a survey of business leaders by PWC said the UK was the third-most attractive country for CEOs expanding their businesses.

Economists and journalists know you can spend a long time arguing the toss on statistics,

But the strongest grounds for optimism comes not from debating this or that way of analysing data points but from our long term prospects: because when it comes to the innovation industries that will shape and define this century the UK is powerfully positioned to play a leading role.

Let’s just look at some of them.

In digital technology, as we heard from Michelle, we have become only the third economy in the world with a trillion-dollar sector.

We have created more unicorns than France and Germany combined with eight UK cities now home to two or more unicorns.

The London / Oxford / Cambridge triangle has the largest number of tech businesses in the world outside San Francisco and New York.

PWC say that UK GDP will be up to 10% higher in 2030 because of AI alone. Fintech attracted more funding last year than anywhere in the world outside the US.

Or life sciences, where we have the largest sector in Europe. And a brilliant advocate with our superb Science Minister George Freeman.

We produced one of the world’s first Covid vaccines, estimated to have saved more than 6 million lives worldwide.

We identified the treatment most widely used to save lives in hospitals, saving more than a million lives across the globe.

We are behind only the US and China in terms of high-quality life science papers published, and every one of the world’s top 25 biopharmaceutical firms has operations in the UK.

Another big growth area is our green and clean energy sector.

The UK is a world leader here, with the largest offshore wind farm in the world. Last year we were able to generate an incredible 40% of our electricity from renewables. But on one day, a rather windy December 30th, we actually got 60% of our electricity from renewables – mainly wind.

McKinsey estimate that the global market opportunity for UK green industries could be worth more than £1 trillion between now and 2030.

And we are proceeding with the new plant at Sizewell C, led by our excellent Business Secretary who also spoke very wisely and surprisingly classically earlier on.

I could also talk about our creative industries which employ over two million people and grew at twice the rate of the UK economy in the last decade.

They have made the UK the world’s largest exporter of unscripted TV formats and help give us a top three spot in the Portland Soft Power index.

Or our advanced manufacturing sector, key to exports, where we produce around half of the world’s large civil aircraft wings and its biggest aeroengines as well as around half of the world’s Formula One Grand Prix cars.

The golden thread running through the industries where the Britain does best is innovation.

Amongst the world’s largest economies, the Global Innovation Index ranks us fourth globally.

Those innovation industries now account for around a quarter of our output. They have been responsible for nearly all our productivity growth since 1997.

And they’re also the reason that all of you are here.

In the audience we have leaders from Meta, Microsoft, Amazon, Apple and Google, the world’s largest tech companies all with major operations in the UK.

We have Monzo and Revolut, shining examples from our world-beating fintech sector.

And we have founders and CEOs from some of our most exciting UK technology companies, like Proximie and Matillion.

You are all vital for Britain’s economic future, but Britain is vital for your future too.

So I want to ask all of you to help our country achieve something that is both ambitious and strategic.

I want you to ask you to help turn the UK into the world’s next Silicon Valley.

What do I mean by that?

If anyone is thinking of starting or investing in an innovation or technology-centred business, I want them to do it here [in the UK].

I want the world’s tech entrepreneurs, life science innovators, and green tech companies to come to the UK because it offers the best possible place to make their visions happen.

And if you do, we will put at your service not just British ingenuity – but British universities to fuel your innovation, Britain’s financial sector to fund it and a British government that will back you to the hilt.

Our universities are ranked second globally for their quality and include three of the world’s top ten.

In order to support the ground-breaking work they do in so many new fields the government has protected our £20 billion research budget, now at the highest level in history.

And as you look for funding to expand, we offer one of the world’s top two financial hubs and the world’s largest net exporter of financial services.

The capability of the City of London combined with the research strengths of our universities makes our aspiration to be a technology superpower not just ambitious but achievable – and today I am here to say the government is determined to make it happen.

But like any business embracing new opportunities, we should also be straight about our weaknesses.

Structural issues like poor productivity, skills gaps, low business investment and the over-concentration of wealth in the South-East have led to uneven and lower growth. Real incomes have not risen by as much as they could as a result.

Confidence in the future though, starts with honesty about the present.

We want to be one of the most prosperous countries in Europe, so today I set out our plan to address those issues.

That plan, our plan for growth, is necessitated, energised and made possible by Brexit.

The desire to move to a high wage, high skill economy is one shared on all sides of that debate.

And we need to make Brexit a catalyst for the bold choices that we’ll take advantage of the nimbleness and flexibilities that it makes possible.

This is a plan for growth and not a series of measures or announcements, which will have to wait for budgets and autumn statements in the years ahead.

But this plan is a framework against which individual policies will be assessed and taken forward.

I set out that plan, those priorities under four pillars. They build on the “People, Capital, Ideas” themes set out by the Prime Minister last year in his Mais Lecture and as such are the pillars essential for any modern, innovation-led economy.

For ease of memory the 4 pillars all happen to start with the letter ‘E’ . The Four ‘E’s of economic growth and prosperity. And they are Enterprise, Education, Employment and Everywhere.

So let’s start with the first ‘E’ which is enterprise. If we are to be Europe’s most prosperous economy, we need to have quite simply, its most dynamic and productive companies.

There is a wide range of literature citing the importance of entrepreneurship on business dynamism, whereby more productive firms enter and grow and less productive firms shrink.

But I don’t just believe the theory, I have put it into practice.

I set up and ran my own business for 14 years. It was one of the best decisions I ever made – and I actually owe it to Margaret Thatcher and Nigel Lawson.

Because by the time I got to university and was thinking about my career options, they had changed attitudes towards entrepreneurship. Had they not, I would have probably ended up in the City or the Civil Service.

Instead I took a different route to end up at the Treasury – less the Fast Stream, more the Long Way Round.

Like thousands of others setting up on their own, I learned to take calculated risks, live with uncertainty and work through failures (of which there were many).

Every big business was a start-up once – and we will not build the world’s next Silicon Valley unless we nurture battalions of dynamic new challenger businesses.

Today, we are already ranked by the World Bank as the best place to do business amongst large European nations and second only to America in the G7.

And the result of that pro-business climate is that since 2010 we have created more than a million new businesses in this country.

But the question I want to ask is how are we going to generate the next million?

Firstly, we need lower taxes. In Britain, even after recent tax rises, we have one of the lowest levels of business tax as a proportion of GDP amongst major countries.

But we should be explicit: high taxes directly affect the incentives which determine decisions by entrepreneurs, investors or larger companies about whether to pursue their ambitions in Britain.

With volatile markets and high inflation, sound money must come first.

But our ambition should be to have nothing less than the most competitive tax regime of any major country.

That means restraint on spending – and in case anyone is in any doubt about who will actually deliver that restraint to make a lower tax economy possible, I gently point out that in the three weeks since Labour promised no big government chequebook they have made £45 billion of unfunded spending commitments.

But it isn’t just about lower taxes. We also need a more positive attitude to risk taking.

Let’s start with one of the most public risks taken this year. Richard Branson, his team and the UK Space Agency deserve massive credit for getting LauncherOne off the ground in Cornwall.

The mission may not have succeeded this time, but what we learn from it will make future success more likely.

We should heed the words of Thomas Edison who said: “I have not failed 10,000 times – I’ve successfully found 10,000 ways that will not work.”

Edison was American – and our attitude to risk in this country can still be too cautious compared to our US friends.

But we are capable of smart risking in this country: at the start of the pandemic we bought over 350 million doses of vaccine without knowing if they would actually work – and ended up with one of the fastest and most effective vaccine programmes in the world.

We also need, if we are going to deliver those competitive enterprises, smarter regulation.

Brexit is an opportunity not just to change regulations but also to work with our experienced, effective and independent regulators to create an economic environment which is more innovation friendly and more growth focused.

Our Chief Scientific Adviser, Sir Patrick Vallance, is currently reviewing how the UK can better regulate emerging technologies in high growth sectors and the government is identifying where to reform the laws we inherited from the EU.

In the digital space Patrick is working with the brilliant , Matt Clifford – who we heard from earlier- and our amazing Culture Secretary Michelle Donelan, both of whom gave excellent speeches.

Before we conclude those findings, we want to hear from you. That why we’ve invited you this morning – and we will repeat the process for green industries, life sciences, creative industries and advanced manufacturing.

Finally when it comes to the ‘E’ of Enterprise there is a critical need for easier access to capital, particularly scale ups.

I am supporting important changes to the pensions regulatory charge cap and I have used the regulatory flexibility provided by Brexit to change the Solvency II regulations which will begin to be implemented in the coming months.

Alongside other measures announced in the Edinburgh reforms, this could unlock over one hundred billion pounds of additional investment into the UK’s most productive growth industries.

But there is much more to be done and I want to harness the ideas and the expertise in this room to turn the ‘E’ of enterprise into an enterprise culture built on low taxes, reward for risk, access to capital and smarter regulation.

The next ‘E’ is Education.

This is an area where we have made dramatic progress in recent years thanks to the work of successive Conservative education ministers.

The UK has risen nearly 10 places in the global school league tables for maths and reading since 2015 alone.

Our teachers and lecturers are some of the best in the world.

And as the Prime Minister has said, having a good education system is the best economic, moral, and social policy any country can have.

That is why the Autumn Statement we gave schools an extra £2.3 billion of funding and why the Prime Minister recently prioritised the teaching of maths until 18.

But there is much to improve. We don’t do nearly as well for the 50% of school leavers who do not go to university as we do for those who do.

We have around 9 million adults with low basic literacy or numeracy skills, over 100,000 people leaving school every year unable to reach the required standard in English and maths.

That matters.

We are becoming an adaptive economy in which people are likely to have to train for not one but several jobs in their working lives.

Not having basic skills in reading and maths makes that difficult, sometimes impossible.

And equally important is what happens beyond school.

We have made progress with T-levels, boot camps and apprenticeships and Sir Michael Barber is advising the government on further improvements to the implementation of our reform agenda and we want to ensure our young people have the skills they would get in Switzerland or Singapore.

If we want to reduce dependence on migration and become a high skill economy, the ‘E’ of education will be essential – and that means ensuring opportunity is as open to those who do not go to university as to those who do.

So, Silicon Valley enterprises; Finnish and Singaporean education and skills; let me now turn to the third ‘E’ which is Employment.

If companies cannot employ the staff they need, they cannot grow.

High employment levels have long been a strength of our economic model.

Since 2010, the UK has seen a record employment rate, the lowest unemployment rate in nearly fifty years and labour market participation at an all-time high.

Partly thanks to the coalition reforms of a decade ago we are at 76% ,employment levels higher than Canada, the US, France or Italy.

But the pandemic has exposed weaknesses in our model. Total employment is nearly 300,000 people lower than pre-pandemic with around one fifth of working-age adults economically inactive.

Excluding students that amounts to 6.6 million people – an enormous and shocking waste of talent and potential.

Of that 6.6 million people, around 1.4 million people want to work. But a further five million do not.

It is time for a fundamental programme of reforms to support people with long-term conditions or mental illness to overcome the barriers and prejudices that prevent them working.

We will never harness the full potential of our country unless we unlock it for each and every one of our citizens.

Nor will we fix our productivity puzzle unless everyone who can participate does.

So to those who retired early after the pandemic or haven’t found the right role after furlough, I say: ‘Britain needs you’ and we will look at the conditions necessary to make work worth your while.

That is why employment is such a vital third ‘E.’

Enterprise, Education and Employment – three key components for long term prosperity.

I conclude with my final ‘E’ – Everywhere. That means ensuring the benefits of economic development are felt not just in London and the South-East but across the whole of the UK.

It is socially divisive if young people feel the only way to make a decent living is to head south. But it is also economically damaging.

If our second cities were the productive powerhouses we see in the other major countries, our GDP would be nearly 5% higher – making us second only to the United States and Germany for GDP per head.

That is why levelling up matters. And why last week it was so exciting to see the progress being made.

Since February 2020, when the levelling up agenda really got underway ,70% of new employed jobs have been created outside of London and the South-East.

Thanks to our powerhouse regions we remain one of the top 10 manufacturers globally, and the same is starting to happen with new industries: whether fintech in Bristol, gaming in Dundee or clean energy in Teesside.

Every region has seen pay grow faster than London since 2010, which shows that our approach to regional growth is working.

But there is much more to do, and whilst government grants can play a galvanising role they are not the whole answer.

We also need the connectivity that comes from better infrastructure.

That is why in the Autumn Statement we protected key projects like HS2, East West Rail and core Northern Powerhouse Rail.

Digital connectivity matters as well. Under Michelle’s leadership, full-fibre broadband now available to more than 40% of all homes in the UK.

Last year four million more premises got access, with the biggest increases in Scotland and Northern Ireland.

But the ‘E’ of Everywhere has to be about local wealth creation as much as about local infrastructure.

So this year we will announce investment zones, mini-Canary Wharfs, supporting each one of our growth industries, and each one focused in high potential but underperforming areas, in line with our mission to level up.

They will be focused on our research strengths and executed in partnership with local government, with advantageous fiscal treatment to attract new investment.

We will shortly start a process to identify exactly where they will go.

But spreading opportunity everywhere needs local decision making alongside local infrastructure and local enterprise.

So we must also give civic entrepreneurs the ability to find and fund their own solutions without having to bang down a Whitehall door.

Shortly over 50% of the population of England will be covered by a devolution deal and two thirds covered by a unitary authority and that’s a very important part of that.

But we need to move more decisively towards fiscal devolution so that fantastic local leaders like Ben Houchen and Andy Street have the tools they need to deliver for their communities.

Four ‘E’s – Enterprise, Education, Employment and Everywhere – four ‘E’s to unlock our national potential to be one of Europe’s most exciting, most innovative and most prosperous economies.

Bill Gates is supposed to have said people overestimate what they can do in one year and underestimate what they can do in ten.

When it comes to the British economy, we are certainly not going to fall into that trap.

We will remember the essential foundation on which long term prosperity depends, namely the sounds money that comes from bringing down inflation. But right now, starts our longer-term journey into growth and prosperity.

World-beating enterprises to make Britain the world’s next Silicon Valley.

An education system where world-class skills sit alongside world-class degrees.

Employment opportunities that tap into the potential of every single person so businesses can build the motivated teams they need.

And as talent is spread everywhere, so we will make sure opportunities are as well.

Yes there are many structural challenges to address. And working our four pillars we will do just that. Never forgetting though the combination of bold ingenuity and quiet confidence that defines our national character.

Ladies and gentlemen, being a technology entrepreneur changed my life.

Being a technology superpower can change our country’s destiny.

So let’s make it happen.

Thank you very much.