finance

Financial services and whisky manufacturers boost Scottish profitability



Businesses in Scotland are reporting above average profitability compared to the UK’s national average, according to accountancy and business advisory firm BDO.

A study of 220,000 UK businesses shows that Scottish businesses have average profit margins of 7.5% – above the UK’s national average of 6.7% – and second only to businesses in London that reported average profit margins of 8.1%.

The profitability of businesses in Scotland is helped by its substantial financial services industry. The sector in Scotland has an average profit margin of 13.6% and employs around 87,000 people.

Edinburgh is home to numerous banks, asset managers insurance companies and fintech firms. For instance, 24% of all UK life insurance employees work in Scotland, along with 13% of all those employed in banking in the UK.

Scotland’s economy is also boosted by the profitability of its whisky distillers. BDO’s research shows that businesses in the country’s flagship drinks manufacturing industry reported profit margins that average 20% – one of the highest levels of profitability seen in any regional industry.

The whisky industry provides £5.5bn in Gross Value Added (GVA) to the UK economy and accounts for 1.4% of all UK goods exports, although the introduction of tariffs in 2019 led to exports of whisky to the US falling by 35% until they were scrapped earlier this year.

Andrew McNamara, business services and outsourcing partner at BDO, commented: “It’s encouraging to see Scottish businesses reporting above average profit margins.

“The heritage food and drink industry is one of the UK’s biggest goods export success stories, while financial services is the UK’s biggest services export – Scotland benefits heavily from the success of both.”

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