Scotland loses £250bn+ in wealth as overseas interests plunder nation

The level of wealth losses in Scotland is being compared to that of developing nations with concerns that the nation is being “massively exploited” by overseas interests.

Official wealth export data seen by The Herald on Sunday that calculates the financial difference between what Scotland produces (Gross Domestic Product) and what is earned by the nation’s people and businesses (Gross National Income) shows that £10.126bn was lost in 2021 alone. For each year of a 22-year period since devolution, Scotland has been a net loser of wealth at an average of £12.1bn per year.

Since devolution, the nation has had a total net wealth loss of £266.350bn much of which comes in the form of profits and dividends to companies and shareholders abroad and elsewhere in the UK. Just over 50% of that went overseas with the rest going to the rest of the UK.

The respected think tank Common Weal, which has been tracking Scotland’s financial strength has raised concerns that the net wealth loss is greater than almost any developed country which is not a tax haven and is causing a “major economic malaise”.

They say the level of profit losses from Scotland is “far too high for a country of our size and economic development and, in fact, outstrips the levels from some of the poorest and most exploited countries on the planet”.

“This should be politically, socially and economically unacceptable and its reversal should be considered a core part of strategic economic planning going forward,” Common Weal said.

They say that a country of Scotland’s financial standing should be a net importer of wealth, meaning that the £10.126bn that was lost in 2021 would turn into a £1.5bn profit, with an expectation of a 1% gain.

Of the £10.126 bn – some £6.2bn went overseas while the rest went elsewhere in the UK.

“Far from improving Scotland for its citizens, the over-reliance on foreign direct investment is stripping this country of its wealth and causing its domestic industry base to wither,” they said.

“Scotland’s biggest economic problem is lack of Scottish ownership in the Scottish economy, certainly at the medium and large scale. If we don’t reverse that, we’ll always be trying to raise the waterline in a vessel with a hole in the bottom.”

One study shows that Scotland outpaced both the UK and Europe on foreign investment in 2022 for the second year in a row – by securing a record 126 inward investment projects in 2022 – up 3.3% on 2021’s 122 projects.

But the concern is that foreign investment requires a return – meaning profit extraction from the country.

It comes as foreign governments including China and overseas firms are known to have major financial interests in Scotland’s offshore wind farm revolution.

The Chinese government has a key interest in Scotland’s Beatrice Wind Farm which was opened in 2019 by Prince Charles

Ministers came under fire at the time for failing to properly cash in on the seven farms that were operating and three major schemes that were in advanced stages of development which together according to energy firms will have 5GW of installed capacity – enough to power double the 2.7m homes in Scotland.

There has been concern that governments in China and the United Arab Emirates which have a key interest in the projects presided over human rights concerns are among the beneficiaries of Scotland’s green revolution.

At that point in the last full financial year, together offshore wind farms made over £230m in profits.

The “astonishing” array of state government-controlled firms that are making millions from having a key stake in Scotland’s collection of offshore wind farms also included France, Norway, Sweden and the Republic of Ireland.

Controlling interests are also being held by privately-owned energy firms in Germany, Spain, Holland and Japan.

The Scottish Government has been criticised for its failure to set up a publicly-owned energy company saying it did not have the powers – while Wales had been developing a similar plan.

Campaigners have long called for the establishment of a state-owned company which would have owned energy resources, to provide secure, reliable and low-cost retail energy to households and to ensure there were renewable energy supply chain and manufacturing jobs for Scotland.

Scotland’s busiest airport, is now owned by French construction firm Vinci which purchased a 50.01% majority stake for £1.27bn last week.

Common Weal which has carried out an analysis of Scotland’s wealth says that the loss is one of the highest in the world.

They say that comparison with over 200 nations of all economic size on the World Bank GNI database shows that the loss is greater than most countries of comparable size and level of income per capita and is greater than the average of the world’s poorest and most heavily indebted countries.

Scotland is placed in the bottom 25 of nations incurring the biggest wealth losses in in 2021.

Some of the biggest economies in the world were all making the greatest wealth gains in 2021.

They include the US with $302.03bn (£242.36bn), Japan with $242.99bn (£195bn) and Germany with $151.09bn (£121.24bn.

Scotland is in the top 40 of countries with the highest losses as a percentage of GDP at 5.59%, but more than 30 are economies that are half the nation’s size or more.

It ranks with Laos on 5.7%, Fiji and Chile on 5.83%, Liberia on 6.1% and Bhutan on 6.13 and topping the table is the smaller economies of…