New Data Shows How Scotland’s Economic Policies Snuff Out Entrepreneurialism

More bad news for Scotland’s economy.

The country ranks near the bottom in people starting business, according to recently published research.

While London ranks top in number of companies created as a portion of the population, Scotland ranks second last, just above Northern Ireland, shows the report published by BestBrokers.com.

The figures are stark.

In London 714 businesses per 100,000 residents were created in the year through June 2023.

Compared that to the whole of Scotland where a paltry 310 businesses were born in the same period. Northern Ireland was only slightly worse at 261, the data shows.

Within Scotland North Ayrshire, and Clackmannanshire ranked particularly low with business creations at 238 and 243 respectively. Note that those figures are worse that Northern Ireland, which has an economy that’s been blighted by terrorism for decades followed by gangsters.

Short-term lets destroying tourism

The news that Scotland seemingly lacks the entrepreneurial mojo comes as the ruling Scottish National Party is rigorously pursuing a policy that is destined to destroy the self-catering sector. New rules now require anyone offering short term rentals such as those advertised via AirBnB
ABNB
to be licensed and to fit new previously not required safety features, which can cost thousands of pounds (thousands of U.S. dollars.)

The short-term let policy looks set to destroy a significant portion of the country’s tourism sector, which represents 5% of the country’s GDP, according to the Scottish government.

While that’s a small portion of the total, it may a indicator of what other sectors have to be prepared to deal with.

Housing remains a problem

Already, Scotland is introducing rental control in order to make housing more affordable. While the goal is good the method will produce the opposite of affordable housing. Landlords will quickly take their housing units off the residential rental market, or will let them deteriorate. That’s certainly what happened in New York. The end result was the City of New York ended up owning a slew of the properties which then spontaneously burned down during the 1970s.

The real answer to affordable housing is to let more housing be built. However, the planning system is not transparent and is costly. Those extra costs and the high risks of failing to get planning permission ultimately mean hosuing costs are higher than they would otherwise be.

As with the tourism sector, those in the construction field will in all likelihood ditch their Scottish efforts in favor of places, likely elsewhere in the UK where building homes is easier and more profitable.

Taxes

On top of those problems the Scottish government charges higher income taxes on all individuals except those being paid the most modest salaries. That gives anyone with a much sort after talent and a high pay package have an incentive to move to a lower tax location, such as England.

When you put these reasons together it quickly becomes clear why Scotland has such a low level of business creation. The current leader, who is now under political pressure, will likely not change course on these policies so would-be small business owners will likely not create a start up or instead may move somewhere else.