National Strategy for Economic Transformation: second annual progress report

Foreword

Foreword by Kate Forbes MSP, Deputy First Minister and Cabinet Secretary for Economy and Gaelic and Co-Chair of the NSET Delivery Board

In 2022, I launched the National Strategy for Economic Transformation (NSET) to set out our ten-year vision for building a wellbeing economy. At its heart is the ambition to create a fairer, greener, wealthier society that delivers prosperity for all of Scotland's people and places.

NSET remains central to the Scottish Government's unwavering commitment to driving economic growth. By delivering the actions within it, we can unlock Scotland's economic potential and, in doing so, tackle poverty, realise our ambitions on net zero and invest in our public services.

As we move into the second year of the strategy, significant early progress has already been made, with 17 of 77 actions now complete (22%) and a further 44 in progress (57%). We have seen such major milestones as the full roll-out of the Techscaler regional hubs to support entrepreneurs, improvements to the consenting process and a commitment to anchor our offshore wind supply chain with strategic investment of up to £500m over the next five years. We have progressed the First Minister's Investor Panel's recommendations, connected over 49,700 premises through the Reaching 100% (R100) broadband programme and completed 55 new 4G masts. We have also launched our new Talent and Migration Service, strengthened Fair Work conditionality, transitioned to the No One Left Behind employability support model and delivered the first set of New Deal for Business milestones.

None of this could have been achieved if we had worked in isolation. I am grateful to our enterprise agencies and delivery partners for continuing to work with government to achieve the objectives of the strategy.

Looking ahead, the economic context for delivering NSET remains challenging; but in the last year, Scotland's economy has shown improvements in growth, business activity, and consumer sentiment, and has demonstrated resilience in the labour market. Scotland continues to be the best location for Foreign Direct Investment in the UK outside of London and the South East. The Scottish Fiscal Commission estimate Scotland's economic growth will strengthen to 0.7% in 2024, rising to 1.1% in 2025. However, despite a fall in inflation, the overall price level remains 22.5% higher than at the start of 2021.

With every pound worth significantly less than when the strategy was launched two years ago, it is now more important than ever that we prioritise those actions that will most effectively grow our economy. As such, over the next year our delivery plans will be prioritised on a smaller set of actions to ensure all our resources are focussed on the actions that will make the biggest impact. Our upcoming Programme for Government and aligned updated NSET delivery plans will highlight the priorities we will take forward over the next year to achieve fair, green growth. All actions we take forward will drive forward our mission to unlock our economic potential in order to tackle child poverty, drive progress towards net zero and increase investment in our public services.