Is Scotland on the brink of recession?

Fraser of Allander Institute, today:

On balance, it’s difficult to conclude anything other than the Scottish economy remains in a fragile position.

Whether or not it will be confirmed in July that we have entered recession is in the balance.

Given the way in which economies operate (and the statistical data is compiled), some form of bounce back is likely at some point. In the short-term, whilst not impossible, the balance of evidence suggest that this is unlikely.

But whatever the next set of GDP data tell us, what is key is the trend over the long-term.

Talk back in 2008 was for the potential of a lost decade of growth. Since 2006, output per head in Scotland has increased by just over 1% (that’s not an average growth rate, that’s the total increase).

With the new fiscal powers coming on stream this year, getting the economy growing again – and on a sustainable basis – will be vital not just for jobs and prosperity, but also our public services.

Initial data for 2016 imports and exports published

The latest Quarterly National Accounts Scotland (QNAS) release include data on Scotland’s onshore imports and exports for 2016.

Source: QNAS 2016 Q4—Summary Tables (Table G).

These initial data show that in 2016 Scotland exported £46.6 billion (63.7%) of goods and services to rUK. As a percentage, this is down very slightly from 64% in 2015, but is subject to future revisions. The statistics also show that 61.7% (£51.3 billion) of Scotland’s imports came from the rest of the UK (up slightly from 61.1% in 2015). (We won’t know how much rUK exported to Scotland in percentage terms until the new Pink Book is published in October.)

Some caution should be exercised with regard to these initial figures for imports from rUK. The government’s bulletin notes that they “rely on statistical modelling and supply & use balancing to produce results. For this reason, results are liable to frequent revisions until they have been subject to a full annual supply and use balancing process.”1.


The below chart gives a fuller picture of Scotland’s trading position, showing how much is imported and exported to and from both rUK and the rest of the world. In 2016 Scotland had an overall trade deficit of almost £10 billion. Scottish Government analysis shows that the increasing value of imports caused the widening of the onshore net trade deficit. This ultimately had a negative effect on GDP growth2.

Source: QNAS 2016 Q4—Summary Tables (Table G).

Full details of 2016 exports are expected to the published in January 2018.


‘Gravity’ relationships in trade

Pro-Union advocates highlight Scotland’s reliance on the rUK export market to argue against independence. However, it’s perfectly possible for a country to do significant trade with its nearest neighbour. For example, in 2015 Canada exported 77% of goods and 55% of services to the USA3. By comparison, Scotland exported 55% of goods and 71% of services to rUK. Or to look at it another way, 55% of Scotland’s exports to rUK are in services (27% of which are in financial and insurance services); 45% in goods4. This exposes Scotland to risk, whether independent or not—but arguably more so under independence, at least early on and until any diversification of trading partners takes place. A good agreement between rUK and Scotland on the basis of legacy arrangements would lessen the likelihood of problems, e.g. with financial regulation.

Scotland’s reliance on the rUK market can be partly explained by considering the so-called ‘gravity’ relationships between trading partners. Keith Head and Thierry Mayar noted in a 2013 research paper that “exports rise proportionately with the economic size of the destination and imports rise in proportion to the size of the origin economy.”5 This statement reflects the data on Scotland’s trading relationship with rUK.

To use another country as illustration, the diagram below shows how in 2006 Japan exported more to the larger economies of the EU, and less to the smaller ones. Also, the larger the economy, the more Japan imported from it.

Source: Head and Mayar, Gravity Equations: Workhorse, Toolkit, and Cookbook (2013), page 7.

The diagram below show how distance is also a factor in how much trade occurs between countries: in 2006 France exported more to, and imported more from, countries that were closer.

Source: Head and Mayar, Gravity Equations: Workhorse, Toolkit, and Cookbook (2013), page 7.

Considering these factors, and Scotland’s long history and shared currency with rUK, it’s little surprise that Scotland exports 64% of goods and services to and imports 62% from rUK6.

(North Sea oil and gas are not included in Scotland’s trade figures because of the difficulty in calculating the figures7. However, some recent experimental statistics have been published.)

General Election 2017 projection and prediction, Glorious 1st of June update

The Glorious First of June by Philip James de Loutherbourg (1795)
The Glorious First of June by Philip James de Loutherbourg (1795)

What’s new in the polls?

So far I never mentioned UK-wide polls as this is a Scottish blog. But this time I feel I have to because something unexpected is happening Doon Sooth. The UK-wide trends show it. Not that it means Jeremy Corbyn will be the next PM, but it might well end up with Corbyn’s Labour doing better than Blair’s New Labour in 2005. On a strongly left-wing manifesto. And that would be good news.

I’m fully aware that it won’t make any difference for Scotland, and won’t make any for England and Wales either as Tories are still hugely favoured to win this election. Labour gaining ground is a sign that the UK might be heading back to sanity after years of delusion. And there is still the possibility that the Conservative lead will shrink even further; and that the last week will see the UK enter hung Parliament territory.

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And now back to ‘too wee, too poor, too daft’ Alba.

As weeks go, the last seven days were kind of a ‘septimana horribila’ for the SNP. With the manifesto launch postponed by a week because of the Manchester bombing, the national campaign was pretty much in limbo and failed to get the proper momentum at a crucial moment. The local campaigns went ahead regardless, are working hard, and seem to be doing well especially in battleground seats. And then a new full Scottish poll from SurveyMonkey (published by the Scottish Sun) found the party at its lowest in three years, ahead of the Conservatives by only 10%.

Facing such an outlier I had to give it some thought before deciding what I would make of it. I finally decided to ignore it. Not because it’s bad for the SNP but because the underlying methodology is unreliable and not abiding by British Polling Council (BPC) rules. For the record, well-established aggregator sites like UK Polling Report ignore SurveyMonkey results entirely. Martin Baxter at Electoral Calculus confirmed to me he won’t include it either as he only uses polls from BPC members.

So here are the updated trends and rolling average:

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The most intriguing part of this week’s rolling average is that the SNP, Conservatives and Liberal Democrats all lost some votes. And all these votes have shifted to Labour, who are up 2% from last week. I find this surprising as it happens just after the uproar caused by Labour-Conservative coalitions in several Scottish Councils, most in defiance of Scottish Labour’s National Executive Committee decisions.

I don’t quite know what to make of it because it could mean one of two things: either voters approve the ‘SNP out’ coalitions (which I would find deeply disturbing because I had expected these situations to have the exact opposite effect); or it is just a by-product of the real Labour surge seen in the most recent UK-wide polls (and then it might change during the last week depending on which direction the UK polls go).

I also compared this week’s results with the rolling average a month ago when I started this series. The SNP (-1.2%), Conservatives (-0.6%), Liberal Democrats (-1%), Greens (-0.4%), and UKIP (-0.9%) are all down. Part of it is surely due to voters now factoring in that Greens and UKIP don’t field candidates in every constituency and reassessing their vote accordingly. But the swing away from the SNP, Conservatives and LibDems benefits Labour, now up 4.2% from a month ago. I find these results to be totally counter-intuitive; and fully expect the last week to have its fair share of surprises too.

And what does that change in the projection and prediction?

As can be expected, this week’s polling average projects into a weaker SNP result. It also makes the outcome more uncertain in a number of battleground seats (twelve now qualifying as ‘Tied’ or ‘Marginal’).

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And finally my updated projection compared with two other models (Electoral Calculus and ScotlandVotes) and my updated prediction. This time I also identified the few seats who qualify as ‘Tied’ on Electoral Calculus’ seat-by-seat analysis.

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I have altered my prediction to 50 SNP seats, the lowest so far. This week’s polling improved the Conservatives’ position in several marginal seats and made a number of SNP holds more unlikely. Coincidentally (or not) 50 seats is also what YouGov predict using their own model and voting intentions from a 50,000 UK-wide panel.

Seats to watch

To conclude my ‘Seats To Watch’ series, let’s have a look at two of the most important seats: Moray, Perth and North Perthshire. Both are held by SNP ‘superstars’ (Angus Robertson and Pete Wishart). Both are part of the ‘historic five’ seats that the SNP has held continuously for the last 20 years in various incarnations through boundary changes. Both are squarely in the danger zone on the current polling average. So will these two seats provide the SNP’s ‘Portillo moments’ (or ‘Balls moments’ if you want a more recent reference) on election night? Possibly, or possibly not.

It should be noted that the two sitting SNP MPs held their seats in recent years with a relatively low share of the vote (40% or below) and thanks to a fractured opposition. Both seats are no longer safe as they turned into the now classic SNP-Conservative one-on-one, with a much stronger Conservative vote than before endangering the SNP. And both are also prime targets in an Unionist ‘coordination scheme‘ revealed by STV.

In both cases I will provide some statistics on recent elections. These will clarify why my perspective on Moray has changed since my first article. Trends in both constituencies clearly show why the SNP should be worried and pay special attention to both constituencies. Basic statistics also show how the SNP vote (and to a lesser extent the Conservative vote) evolved on strikingly similar patterns in both seats. These were once SNP heartland. This year they might turn into Conservative base camp. Or not.

Moray

The Moray House of Commons (HofC) constituency covers the same area as the Moray Council. It is also the area covered by the Moray Scottish Parliament (SP) constituency except for one-and-a-half wards that are part of Banffshire and Buchan Coast. So here comparisons between the HofC, SP and Council votes seem relevant even if different elections follow different patterns. The widely similar trends in recent years are what matters.

Moray (and its almost predecessor seat Moray and Nairn) was a Conservative stronghold from 1923 to 1987, except between 1974 and 1979 when Winnie Ewing held Moray and Nairn for the SNP.

It is also worth remembering that (apart from the 2015 landslide) the SNP never did better than 44.5% in the current Moray (Margaret Ewing in 1992). Sitting MP Angus Robertson (again apart from 2015) was elected three times on less than 40%. So there are clear hints that 2015 was an outlier and the SNP is not as safe here as you might think at first glance.

Martin Baxter at Electoral Calculus gives the Conservatives a 58% chance of winning here. His demographic statistics also point to a more favourable profile than average for the Conservatives (older, larger proportion of ‘UK born’, equal split on EU membership). His projection of vote shares and mine are pretty close, with a Conservative lead of about 4% to 6%. Not coincidentally in my opinion, the Conservative lead over the SNP in last month’s Council elections was within that range.

Finally the most significant statistical result is that, unlike other parts of Scotland, there has been a real Conservative surge here recently. Conservatives nearly doubling their vote share in 2016 and more than doubling it in 2017 is obviously a bad sign for the SNP. The Unionist vote visibly coalescing around the Conservatives here also makes this seat a golden opportunity for a gain.

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The SNP candidate is Angus Robertson, who obviously needs no elaborate introduction. As the party’s Group Leader in Westminster since 2007 and Depute Leader since last October, he has been one of the most visible SNP figures recently, second only to Nicola Sturgeon. Robertson was the SNP panelist in yesterday’s Election Debate instead of Sturgeon for genuine practical reasons. But the extra media exposure it offered him was obviously welcome as he faces a tough re-election.

Labour and the Liberal Democrats will obviously play third and fourth fiddle here, so I will not discuss the merits of their candidates, especially as both are complete unknowns to me.

The Conservative candidate is Doug Ross (this one, not that one), assistant football referee and list MSP for Highlands and Islands. Also the Conservative spokesperson for Justice in Scottish Parliament. Ross had his fifteen minutes of fame last September when he was away for a whole week on a ‘referee trip’ to Switzerland. He missed a Justice Committee meeting and also a key vote on the Council tax that the SNP government won while they should have lost it (63-63 with the Presiding Officer casting the tie-breaking vote in favour of the government as convention requires). At the time Kezia Dugdale’s vote ‘failing to register’ made headlines. But it wouldn’t have mattered if Ross had been present; then the government would have lost 64-63.

Though Ross supported ‘Remain’ during the EU referendum campaign, the newly-found ‘best Brexit deal’ talking points might go down well with voters in a constituency which supported ‘Remain’ by only 122 votes. He will of course campaign on ‘No to independence’ like all Scottish Conservative candidates. And probably also attack Robertson on the SNP’s record on devolved matters, just as Ruth Davidson did during the BBC’s abysmal Scottish leaders’ debate. That this is irrelevant in a General Election campaign probably doesn’t matter as a precedent has been set. And unfortunately it might very well work if Robertson falls for it as Nicola Sturgeon did.

I think the SNP will do a little better here than statistics say but not by much, even if I predict they will lose less votes here than the national average. I also have a hunch that even the incumbency factor will not be enough to overturn the projected Conservative lead. In the end I go with the statistical evidence and the high probability of a major upset, so reluctantly…

I rate it as a Conservative gain from SNP
Conservatives 47% (+16%), SNP 46% (-4%), Labour 6% (-4%), LibDems 2% (-1%)

Perth and North Perthshire

This constituency has an electoral history pretty similar to Moray’s. It and its ‘near-predecessor’ seats were held by the Conservatives from 1924 to 1997 except for a short Liberal Unionist interlude in 1935. Its near predecessor Perth and East Perthshire was also held by the SNP between 1974 and 1979, with Douglas Crawford as its MP. Then as North Tayside it was John Swinney’s seat from 1997 to 2001. When Swinney stood down to avoid double-jobbing as MP and MSP, Pete Wishart took over. As in Moray the SNP’s vote share under current boundaries was always below 40%, except in the 2015 landslide. And the 2015 result was pretty similar in both seats.

I based the comparisons with SP and Council elections on the Perthshire North SP constituency on one hand, and the eight wards covered entirely or mostly by the Westminster constituency on the other. Perthshire North does not exactly overlap Perth and North Perthshire as it does not include the whole of the city of Perth, but the boundaries are close enough to identify a trend.

I have to disagree with Martin Baxter on this one. His projection includes an ‘Other’ candidate while in fact there is none here. The 2015 Independent candidate Xander McDade (an opposition independent councillor on the current Conservative-led Perth and Kinross council) appears to be quite left-leaning on a number of major national policy issues, so I expect his absence this year to benefit the SNP.

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Just like Angus Robertson, sitting SNP MP Pete Wishart does not need an elaborate introduction. As the keyboardist for Big Country and Runrig he was in the public’s eye long before his first election. Since then he has done his best to maintain a high profile and high visibility, even (or perhaps especially) when it implies taking provocative and controversial positions on some issues. His Twitter account draws a lot of attention since he was awarded ‘Parliamentary Tweeter of the Year’ in 2014.

The outcome here will probably be decided by the differential turnout between the rural wards (leaning Conservative) and Perth itself (leaning SNP). So I think the SNP’s decision to hold their rescheduled manifesto launch in Perth (instead of the original venue in Edinburgh) was also clearly devised to bring the constituency and Wishart into the spotlight at a key moment.

The Conservative candidate is Ian Duncan MEP. Duncan campaigned in 2014 on a platform of EU reform and was an early proponent of an EU membership referendum. But his blog posts both before and after the referendum were ambiguous, carefully worded to not explicitly reveal which side he was on. This might not go down too well here as Perth and Kinross voted 61% ‘Remain’, just 1% below the national average. Duncan is surely aware the ‘best Brexit deal’ talking points will mostly fall on deaf ears here and he was careful not to mention it when he announced his candidacy. Duncan might be an accomplished MEP but he does not strike me as much of a campaigner. Even his blog post about the second independence referendum sounded long-winded and bland. And did not even include the magic words ‘No To Independence’.

Labour’s David Roemmele and Liberal Democrat Peter Barrett will compete for a distant third place. Both of them can’t expect more than watching the SNP-Con one-on-one from the sidelines.

Statistically this seat is a tie, with the Conservatives slightly favoured. But even the Daily Record is very careful not to speculate on the outcome. Unlike Moray, I believe this one is close enough for the incumbency factor to work and get Wishart re-elected.

I rate it as a SNP hold
SNP 46% (-4%), Conservatives 45% (+12%), Labour 5% (-3%), LibDems 2% (-2%)

And this concludes my ‘Seats to watch’ discussions. Next update will be on Election Day so I will only discuss the broader picture: what will this GE deliver for Scotland? And, to stay on the cautious side, I will give one straight answer but also propose some possible alternative scenarios.

As we all know psephology is not an exact science, the accuracy of polls is in doubt, and even seemingly minor events can switch voters in sufficient numbers to make the outcome even more uncertain. I’ll deal with that next week.

Saor Alba gu bràth

Jeremy Blackwell, 1 June 2017

Jeremy BlackwellJeremy Blackwell is an analyst and statistician living and working in Edinburgh. You can follow him on Twitter at @WeAreThe59.

Immigration and the UK Economy

Professor Jonathan Wadsworth, senior research fellow at the Centre for Economic Performance, LSE—Immigration and the UK Economy, published today:

  • Much of the recent falls in net immigration are driven either by a rise in emigration or a fall in the number of Britons returning to the UK—things over which the government has very little control.
  • Immigrants do not take most new jobs. The immigrant share in new jobs is—and always has been—broadly the same as the share of immigrants in the working age population.
  • Areas of the UK with large increases in total or EU immigration have not experienced greater falls in either jobs or pay of UK-born workers. The big falls in wages observed after 2008 are more closely associated with the fallout from the global financial crisis than immigration.
  • There is little effect of immigration on inequality and the relative pay and job prospects of less skilled UK workers. Changes in wages and joblessness for less educated UK-born workers show little association with changes in immigration.
  • Immigrants pay more in taxes than they take out in welfare and use of public services. UK-born individuals, on average, take out more in welfare and benefits than they pay in taxes. So immigrants help to reduce the budget deficit. There is little evidence that immigrants have negative effects on crime, education, health or social housing.

On productivity and GDP growth:

Migration acts much like trade in capital, as people tend to move to countries where they can be more productive and earn higher incomes. This increases welfare through greater efficiency in labour allocation across the world. Immigrants also fill the gaps in the skill composition of the national workforce. This fosters specialisation, increases productivity and raises the wages of national workers with complementary skills.

Recent work by Boubtane et al (2015, Table 3) finds that a 50% decrease in the net immigration rate would reduce UK productivity growth by 0.32% per annum. Since EU immigration is half of the current UK total … cutting EU immigrants to 80,000 per year is likely to shave 0.16% off productivity growth. So about a decade after Brexit, UK GDP per capita will be about 1.6% lower than it would have otherwise been.

Merkel’s European Wake Up Call Is Being Answered in the Nordics

Today in independent countries co-operating with each other economically and militarily…

Bloomberg, 29 May:

Sweden, Denmark, Finland and Norway have over the past two years been deepening their military cooperation to counter a deteriorating security situation in the Baltic and the Arctic. They are also forging closer ties on softer issues, presenting this week a joint initiative to meet sustainability goals, promoting the 20 million-person region’s shared values on social equality, and discussing joint interaction with China.

[Finnish Prime Minister Juha] Sipila said there are “a lot” of possibilities to strengthen economic ties across the region, including setting up a single “digital market” and a bio-fuels market.

The Nordic leaders also discussed more joint cooperation in dealing with China, albeit on an “ad-hoc” basis, according to Swedish Prime Minister Stefan Lofven, as well as combating climate change.

“As the most integrated region in the world we have today agreed to further deepen our cooperation,” Lovfen said at a press briefing.

Also, a relevant article from last year: Nordic Nations Deepen Cooperation Amid Worsening Baltic Security (Bloomberg, 27 Sept 2016).

In relation to Scotland, I’ve not yet read the recently published book Security in a Small Nation: Scotland, Democracy, Politics, edited by Edinburgh University’s Andrew Neal, but I intend to do so. Chapters include ‘Perspectives on Small State Security in the Scottish Independence Debate’, and ‘Do Small States Need “Alliance Shelter”? Scotland and the Nordic Nations’. It’s freely available to download in PDF format.

General Election 2017 projection and prediction, 25 May update

On Monday night Manchester was hit by a cowardly and brutal terrorist attack. It targeted young people who were together to enjoy themselves and have fun, just as previous terrorist attacks in Paris and Berlin did. It is yet another sign that those who want to destroy our democracy will stop at nothing.

We won’t back down. We will stand up united for freedom, life and joy.

Some have already tried to make political gain out of this terrorist act. Shame on them.

My thoughts with Manchester and all who lost loved ones or were injured in the attack.

And now back to business as usual, with a heavy heart.

On the reliability of polls

We already know that polls have a reputation for unreliability. The 2015 General Election is the best known example. The 2011 and 2016 Scottish Parliament elections also prove it. And hard evidence demonstrates that polls can often be off by much more than the margin of error. The methodology itself is sometimes flawed, especially the weighting of voting intentions relative to previous votes or other mysterious criteria. A pollster following British Polling Council guidelines doesn’t mean the results should be taken at face value. They all follow the guidelines and have all been wrong at some point in the past.

So let’s see what the projection of seats becomes on three possible scenarios:

  • Scenario A is based on last week’s polling average. SNP 44%, Conservatives 29%, Labour 16%, LibDems 6%.
  • Scenario B is SNP overestimated by 4%. Vote supposed to be SNP 40%, Conservatives 31%, Labour 17%, LibDems 7%.
  • Scenario C is SNP underestimated by 4%. Vote supposed to be SNP 48%, Conservatives 26%, Labour 15%, LibDems 6%.
A B C
SNP 51 41 58
Labour 0 1 0
Liberal Democrats 1 3 0
Conservatives 7 14 1

Note that even the worst case scenario would still give the SNP as many seats as Scottish Labour held from 2005 to 2015. Remember nobody then denied Labour was the dominant party and had a mandate to speak for Scotland. Whether Labour did it or not is a different story and I won’t discuss that right now.

Continue reading General Election 2017 projection and prediction, 25 May update

ONS publishes public sector revenues for the countries and regions of the UK

The ONS has published some experimental statistics detailing public sector revenue and expenditure for the countries and regions of the UK.

The data finds that in 2015/16 Scotland raised the fourth most (£10,230) in public sector revenue per person out of the UK’s 12 NUTS 1 statistical regions, and received the second most (£13,054) in terms of public sector expenditure. This resulted in a deficit of £2,824 per person.

Scotland’s deficit was the fifth biggest in the UK, behind Northern Ireland (£5,437), Wales (£4,545), and North East (£3,827) and North West (£3,043) England. Only the East of England, the South East, and London had a surplus.

We’ve created three graphs based on the data. You can explore all the data here.

Source: ONS—Country and regional public sector finances: Financial year ending March 2016, Table 3 (.xls).

Source: ONS—Country and regional public sector finances: Financial year ending March 2016, Table 5 (.xls).

Source: ONS—Country and regional public sector finances: Financial year ending March 2016, Tables 3 and 5.


To put the UK in context, the below chart from Eurostat shows just how big the disparity in GDP per capita is between London and the national average when compared with other EU countries.

(We’re not sure why the UK is the only country with two blue circles for ‘Capital region’. We’ve asked Eurostat about this and will update the page when they get back to us.) Update—Eurostat has informed us that the lower blue dot in the UK column is a visualisation error and in fact belongs to ‘Other NUTS regions’.

Gross domestic product (GDP) per inhabitant in purchasing power standard (PPS) in relation to the EU-28 average, by NUTS 2 regions, 2014 (% of the EU-28 average, EU-28 = 100)
Gross domestic product (GDP) per inhabitant in purchasing power standard (PPS) in relation to the EU-28 average, by NUTS 2 regions, 2014 (% of the EU-28 average, EU-28 = 100). Source: Eurostat—Image, originating page.

RBS High Court trial set to take place this week

FT.com, 21 May:

Disgraced former Royal Bank of Scotland chief executive Fred Goodwin will be back in the spotlight in a High Court trial starting this week that will delve into the disastrous events at the bank in 2008.

The £700m High Court case has been brought by thousands of RBS shareholders who allege they lost money in a £12bn rights issue launched by the bank in June 2008. A few months later, RBS had to be bailed out by the British government to the tune of £45.5bn.

The investors claim the rights issue prospectus contained misleading statements about the true financial position of RBS under Mr Goodwin’s leadership. RBS and four ex-directors named as defendants including Mr Goodwin deny wrongdoing. Mr Goodwin will testify under oath for the first time during the trial.

UpdateReuters, 22 May, 10:14am:

Royal Bank of Scotland … has tried to reach a last-minute settlement with a group of investors who allege that the lender misled them over a 2008 capital increase, according to two people close to the matter.

A successful settlement would save RBS from a lengthy and potentially embarrassing trial, at which its former Chief Executive Fred Goodwin would face scrutiny over his decision-making and leadership at the time of the lender’s near-collapse.

Update IIReuters, 24 May, 12:13pm:

A British judge has given Royal Bank of Scotland … a week to avoid a trial by reaching a deal with investors who allege the bank misled them over its 2008 fundraising.

Judge Robert Hildyard adjourned the case on Wednesday until June 7, but warned this would be the final chance to reach an out-of-court settlement and said the two sides must inform him whether a settlement has been reached by June 1.

RBS has already offered almost 1 billion pounds ($1.3 billion) to avoid a trial that would rake over its near collapse and state bailout during the height of the credit crisis and bring former chief executive Fred Goodwin to court.

Update IIIFT.com, 29 May:

Fred Goodwin, the former chief executive of Royal Bank of Scotland, is likely to escape a potentially embarrassing court appearance after the bank reached a legal settlement in principle with a shareholder action group.

The group, which represents about 9,000 RBS investors, said on Monday that it would accept 82p a share from the bank.

General Election 2017 projection and prediction, 18 May update

Teaser: this week’s update will definitely be better for the SNP than the previous ones.

Scottish Greens standing down: a game-changer?

Technically the Scottish Green Party are not standing down. They just will be fielding only three candidates, compared to thirty-two in 2015. Whatever the official explanations and carefully crafted talking points, the true political intention is clear: get out of the way in marginal constituencies and hope it will benefit the SNP. And then get something in return. But that’s me going cynical.

In 2015 Scottish Greens received 39,205 votes or 1.3% of the national vote (sixth behind UKIP). In the 32 constituencies where they stood their average vote was 2.6%. Lowest in Rutherglen and Hamilton West (0.5%) and Glasgow East (0.9%). Highest in Glasgow North (6.2%) and Edinburgh East (6.0%). They also lost their deposit in 29 constituencies and that’s certainly something they chose to avoid this year. But that’s me going cynical again.

Recent polls credited Scottish Greens with 2 to 6% of the vote, with pollsters assuming they would stand in all constituencies. On average they’re credited with almost 4%, double their 2015 vote share. Allowing for margin of error and uncertainty about how Green supporters will vote now, it probably leaves about 2 to 3% of the vote literally up for grabs for the SNP nationally.

At the time of the announcement my model identified 14 Scottish seats as marginals. Seven of them with the Conservatives favoured; five with the SNP and two the Liberal Democrats. The Scottish Green Party fielded candidates in nine of these constituencies in 2015 and will be fielding only one this year (Edinburgh North and Leith). So the SNP have a real opportunity either to switch some seats back to their column or to hold them on better margins than projected.

Will the Greens’ decision be the turning point of this campaign? Probably yes if the SNP play it smart from now on. Conservatives have already started denouncing a ‘Yes alliance’ which in fact doesn’t exist; because they know some seats might be out of their reach now. And ultimately it’s up to the SNP to make the best out of the better hand they have unexpectedly been dealt.

UKIP are also fielding fewer candidates this year than in 2015, and this should bring a few more votes to the Conservatives. I expect the impact to be less visible, because polls show UKIP in Scotland down from 2015 as in the rest of the UK. Their vote share was never really significant in Scotland and some of their 2015 voters seem to have shifted to the Conservatives already.

How did the polling data evolve?

Unfortunately we don’t have any new full Scottish poll again this week, but a large number of new Scottish subsamples from UK-wide polls, used with all the usual caveats. Now that the campaign has started, polls show a slight swing towards the SNP and against the Conservatives. This is visible in the trendlines and has started to make rolling average better for the SNP.

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James Kelly’s ‘Poll of polls’ on Scot Goes Pop is even more favourable to the SNP. But he doesn’t use the same set of subsamples. I keep some older ones in my set that James has already discarded. They were distinctly less good for the SNP than the more recent ones. And, as I said before, when I have a choice I always choose the scenario that is least favourable for the SNP. Previous elections taught us that a cautious approach is often the wisest.

How do all these factors change the projection and prediction?

I have adapted my model to the new context. In an additional final step I chose to reallocate 60% of the potential Green vote to the SNP and 90% of the potential UKIP vote to the Conservatives in all constituencies where Greens or UKIP stood in 2015 and don’t stand this time. This is obviously an approximation and the real transfers will be more complex. But I had to make an assumption and this one seemed as good as any other.

The cumulative effect of the slight change in polling average and the reallocation of Green votes is to shift three marginal seats from the Conservative to the SNP column (Edinburgh South, Perth and North Perthshire, and Stirling). Aberdeen South and Moray remain in the Conservative column because of the reallocation of the 2015 UKIP vote but in both cases the Conservative lead is much reduced.

Martin Baxter at Electoral Calculus has also adapted his model to account for the actual Green and UKIP candidacies. He delivers the exact same number of seats as my model when fed with the same polling average data. But there are still a few differences in the allocation of seats to each party. ScotlandVotes is less favourable for the SNP but close nevertheless. I have a hunch their model has not been adapted in the same way as the others (yet) and still reflects what would happen with a much larger number of Green candidates.

Below are my updated projections (seats by SLLM—Safe, Likely, Lean, Marginal—rating, and seat by seat winner’s margin) and the full seat-by-seat projected results. Again I’m taking a big risk here as some of the detailed results might be way off, but it’s worth it.

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And finally the summary of my updated projection (compared with what Electoral Calculus and ScotlandVotes would project) and my updated prediction.

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In my prediction I switched three seats from the Conservative to the SNP column: Aberdeen South, East Renfrewshire, and Moray. I already explained my reasons for these three seats in previous posts, so I will not elaborate further.

Seats to watch

Dumfries and Galloway

Dumfries and Galloway is one of the top Conservative targets in this election. This seat and its (almost) predecessor Galloway and Upper Nithsdale have been held by all three major parties (SNP, Conservatives, and Labour) at some point in the past 24 years. So it can really be called a battleground.

The decline of Labour in recent years has benefited both the SNP and the Conservatives here. But recent trends point to Conservatives having the upper hand, with the SNP coming second both in 2016 and 2017. Even if Scottish Parliament and Council elections are not predictors of the General Election, they nevertheless give some hints on which direction the electorate is moving.

The SNP candidate is sitting MP Richard Arkless. He gained the seat from Labour in 2015 on a 25% swing and with a majority of 6,500. As a hint of things to come the Conservatives finished second and Labour was already relegated to third place. I didn’t find much to say about Arkless except what you find in his profile on the SNP website and his Twitter account. He comes out as a typical low-profile backbencher, deeply involved in his job as MP and certainly respected and well-liked by his constituents. But is that enough to win in a competitive election that has already turned nasty on the national level?

The Conservatives are fielding Alister Jack (a local farmer and businessman who will campaign on the usual ‘no to independence’ and ‘best Brexit deal’) and Labour Daniel Goodare (a local A&E doctor).

Goodare doesn’t stand a chance as Labour support has gone downhill here just as much as anywhere else in Scotland. Jack will try to build on Conservative success in the area in 2016 and 2017. Apart from the classic Conservative campaign themes, he will also try to rally the farmers’ vote. It already paid off in other rural areas of Scotland in 2016, regardless of the validity of the arguments, and is probably the key to a Conservative gain here.

I rate it as a Conservative gain from SNP
Conservatives 41% (+11%), SNP 39% (-2%), Labour 18% (-7%), LibDems 2% (-)

Edinburgh South

This one will obviously be the most watched of all Scottish constituencies in this General Election, being the last Labour seat in Scotland and an unexpected Labour hold in 2015. Over the last 40 years Edinburgh South has been first a weak Conservative seat and then a weak Labour seat. It is also one of the trickiest to predict as Edinburgh politics have a life of their own and have recently been full of upsets. So whoever wins on 8 June will probably do so by just a few hundred votes.

In 2015 the SNP clearly did not choose the best candidate here. This is obviously not the case this year. SNP candidate Jim Eadie was MSP for Edinburgh Southern from 2011 to 2016. During his term he played an important part in the Scottish Parliament’s work; first as Parliamentary Liaison Officer for First Minister Nicola Sturgeon and then as Convener of the Infrastructure and Capital Investment Committee. Eadie was unseated in 2016 by Labour’s Daniel Johnson though he gained 2,500 votes and 3% of the vote compared to 2011. His defeat was at the time widely attributed to massive Unionist tactical voting, which seems to have become quite common in Edinburgh recently. His nomination for the General Election has been interpreted as a clear sign the SNP intend to put up a real fight for this seat. The SNP can certainly count on Eadie’s high name recognition, personal status and strong campaigning skills to bring in the extra votes needed to gain the seat.

After a seemingly chaotic selection process, the Conservatives nominated Stephanie Smith, who has since been elected Councillor for the Liberton/Gilmerton ward. Previously she stood for MSP in Almond Valley in 2016 and finished a distant third. Other than this I admit I know nothing about her. I find it surprising that the Conservatives did not choose a more high-profile candidate such as Miles Briggs, who stood here in 2015. But this year Briggs is standing in the neighbouring Edinburgh South West, which I will discuss in my next update. The Conservatives probably expect that Smith will automatically benefit from their surge in Edinburgh over the last two years but they should not take it for granted. She could also benefit from UKIP fielding no candidate this year (they received 1.2% here in 2015).

And finally Ian Murray, the sitting Labour MP. Murray was first elected in 2010, taking over from retiring Labour MP Nigel Griffiths. Common wisdom at the time was that he would lose the seat (then a Labour-LibDems marginal) to the Liberal Democrats. But he won by 316 votes. Again in 2015 Edinburgh South was generally considered highly likely to switch to the SNP. But Murray held the seat by 2,637 votes, with some help from the SNP themselves. There’s definitely something of the ‘come-back kid’ in him.

Murray is a member of the Blairite (or ‘progressive center-ground’ as they call themselves) Progress group and it shows in his voting record. He has been the target of harsh criticism from within Labour after his highly publicised resignation from the Shadow Cabinet and also because of his perceived undermining of Jeremy Corbyn. Murray has won an award as ‘most responsive Scottish MP’, whatever that actually means. But he is certainly not as popular as he claims or would like to be, even within his own party. What was once dubbed ‘The Socialist Republic of Morningside’ may well not be as kind to him as it was two years ago.

This seat is technically a three-way marginal bordering on a three-way tie. Common wisdom is that Conservatives will gain it but I strongly doubt it. The Greens’ decision to stand down in this constituency will probably be less of a game-changer here than in other seats. They received 4.2% of the vote in 2015 and it’s likely to switch to both SNP and Labour.

So I will go out on a limb again and…

I rate it as a SNP gain from Labour
SNP 35% (+1%), Labour 33% (-6%), Conservatives 29% (+12%), LibDems 3% (-1%)

A little extra: the three constituencies where the Scottish Green Party stands…

Edinburgh North and Leith

I expected Greens to stand down in this one too, because it’s a marginal and the only one of the three where a Green candidacy could actually hurt the SNP’s prospects of holding the seat. Greens received 5.4% of the vote here in 2015 and can be expected to reach 8-10% this year under favourable circumstances. Such a result would reduce the SNP margin to probably 2 or 3% down from almost 10% in 2015. I don’t expect Greens to do much better than that. They do well in the eastern part of the constituency but significantly less in its western part; and their results here in the 2017 Council elections were not much different from 2012. But I think the SNP here would still welcome a fair share of tactical voting within the pro-Independence camp.

Falkirk

Greens intend to campaign here on ‘ban fracking’. The SNP have already explained at length why the current moratorium is the best choice; and how an outright ban would backfire as it would be challenged in court and would be overturned. Greens did not stand here in 2015 so there is little basis for comparison; only that they received 4.7% of the list vote for the Central region (which includes Falkirk) in 2016; and 3.6% in Falkirk Council elections this month. I expect their share of the vote in this GE to be fairly close to that.

Glasgow North

Patrick Harvie received 24% of the vote last year in the Glasgow Kelvin Scottish Parliament constituency. But it doesn’t say much about what might happen in this General Election. Greens did well in the Hillhead ward two weeks ago (26%; one councillor elected on first count) but not so well in other areas of the constituency. Greens received 6.2% of the vote here in 2015. So I don’t expect Harvie to do much better than 15% this time. That would have him competing with the Conservatives for third place, not with the SNP for first.

Next week: Edinburgh West, Edinburgh South West

Saor Alba gu bràth.

Jeremy Blackwell, 17 May 2017

Jeremy BlackwellJeremy Blackwell is an analyst and statistician living and working in Edinburgh. You can follow him on Twitter at @WeAreThe59.

General Election 2017 projection and prediction, 10 May update

By Jeremy Blackwell

Now that the Conservatives have won the Council elections in Scotland, and Ruth Davidson has taken Glasgow and won the French Presidential election, I will have to reconsider all my predictions. Just kidding, but in some cases what happened last Thursday offers a different perspective on what might (or might not) happen on 8 June. So let’s go.

How did the polling data evolve?

For the record, I have my doubts about polls. In 2011 they underestimated the SNP and failed to predict the SNP majority in the Scottish Parliament. In 2015 they were spot on and predicted the SNP landslide in Westminster. In 2016 they overestimated the SNP and failed to predict SNP losing their majority in the Scottish Parliament. So what is it going to be this time?

That being said, there have been few new polls in the last week and unfortunately no full Scottish polls. The trend, not unexpectedly, is again better for the Conservatives than for the SNP:

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The rolling average also moved in favour of the Conservatives and against the Liberal Democrats. This obviously has an impact on the projections, and has also changed my prediction for a few seats.

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Continue reading General Election 2017 projection and prediction, 10 May update