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The UK economy as a whole is growing, but the overall pace slowed in 2015; GDP growth fell to 2.2% in 2015 from 2.9% in 2014 (at the time of writing, the Bank of England’s current forecast for 2016 is 2.2%). This is attributable to a combination of headwinds, such as a slowdown in emerging markets (and global growth generally), as well as financial markets volatility.

Scotland lags behind the rest of the UK in terms of economic growth. A major drag has been the fall in oil prices, which has not only impacted the industry itself, but also other sectors that are exposed to it. A number of major operators and service sector companies are located in Scotland, so it is particularly vulnerable.

Aberdeen, which represents the epicentre of the oil and gas industry in the UK, had previously been insulated from the aftershocks of the 2008 global financial crisis due to its ties to what was a booming sector. A depressed environment in 2015, however, hit exploration and production activities of operators in the North Sea, leading to disposals of non-core assets, refinancings and restructurings. In a similar vein, service providers to operators needed to adopt their own cost-cutting measures. In September 2015, industry body Oil & Gas UK estimated that 65,000 jobs had been lost in the sector since the start of 2014. As companies went into redundancy mode, this meant that there was no longer a clamour for office space in Aberdeen, and housebuilding activity also slowed.

Notwithstanding the above, it is anticipated that from 2016-2020, construction growth for Scotland as a whole will mainly be driven by housebuilding as many large-scale projects come to an end, such as the Aberdeen Western Peripheral Route and Queensferry Crossing, as well as various motorway upgrades.

As with the rest of the UK, services are a major driver of activity in Scotland, particularly in sectors such as food and drink, hotels and leisure, and financial services. There are other bright spots, most notably in Edinburgh and Glasgow. The commercial property sector was particularly buoyant in the former in 2015; the private rented space was active, there was a marked uptick in student accommodation developments, and housebuilding activity was strong. In addition, corporate and commercial transactional activity was vibrant, particularly in early-stage/high-growth and technology companies. The notable rise of companies such as FanDuel and Skyscanner is a shining light for Scotland. Similarly, Glasgow has seen an upswing in activity.

A looming cloud on the horizon, however, is the uncertainty over the possible outcome of the forthcoming Brexit vote, and particularly whether a wider UK vote to leave the EU will lead to a renewed bid for Scottish independence. There are particular concerns that this uncertainty might deter inward investment into Scotland.

In the renewable energy arena, statistics published by the UK government in December 2015 show that Scotland generates most of its power from ‘clean energy’ sources (wind farms, hydro power plants and other clean technologies), rather than nuclear energy, coal or gas. The Scottish government has pledged that all of Scotland’s electricity will be provided by renewable energy by 2020. This position is somewhat at odds with the UK government’s apparent reduction in its commitment to green energy policies, ending public subsidies for new onshore wind farms and solar farms from 1 April 2016. Industry body Scottish Renewables has expressed its concerns about the subsidy cuts; the long-term impact remains to be seen. In 2015, however, legislative changes meant that there was a particular increase in activity as developers looked to secure subsidies before they are withdrawn.

In 2015, McClure Naismith LLP went into administration, while Clyde & Co LLP entered the Scottish market following its merger with Simpson & Marwick LLP. These developments reflect an ongoing trend of consolidation in the Scottish legal market in the post financial crisis era.

Noted for its UK and international network of offices, Pinsent Masons LLP’s merger with McGrigors in 2012 has enabled it build a sizeable, heavyweight Scotland presence. Another international law firm, CMS, merged with Dundas & Wilson in 2014, enhancing its offering in energy and financial services. Shepherd and Wedderburn’s acquisition of Tods Murray in 2014 (following the latter’s administration) bolstered its strengths in areas such as banking, renewable energy (acting for landowners and developers) and private client. Like Shepherd and Wedderburn, Maclay Murray & Spens LLP and Dickson Minto WS are other Scotland-headquartered firms with offices in London; the latter is well regarded for banking and finance, as well as corporate and commercial work. Brodies LLP and Burness Paull LLP are among the largest of the independent, indigenous Scottish firms and have an outstanding reputation across a wide range of disciplines. Both firms have offices in Aberdeen, Edinburgh and Glasgow. Turcan Connell has a particularly strong reputation in the private client sphere. Harper Macleod LLP is not only active in the Central Belt, but also has a noteworthy presence in the Highlands and Islands market. Firms such as Aberdein Considine, Blackadders LLP, Ledingham Chalmers LLP, Stronachs LLP and Thorntons Law LLP are also noted.

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