Scotland facing ‘worst slump in world’ as GDP plummets
Fiona Hyslop: ‘serious impact’
Scotland’s GDP plunged by 18.9% during April – the first full month of lockdown – adding to fears that it would have the worst performing economy in the developed world.
Senior SNP figure Andrew Wilson, who chaired his party’s Growth Commission, issued the warning as the data laid out the challenge facing the government.
“What’s clear to me is the UK is set to be the worst performing economy in the developed world and Scotland’s probably going to be a bit worse because of the nature of our sectors and how the virus has behaved north and south of the border,” he said in an interview.
He added: “I think this is a long-haul back, not a V-shaped bounce back at all.
“I think the prospects are that we need a monumental effort – politicians and governments working in collaboration – to get the measures we need in place to rescue businesses.”
New data published issued by the chief statistician shows Scotland’s GDP fell by 2.5% during the first quarter (Jan-Mar) of 2020.
Over the year, compared to the first quarter of 2019, the economy has contracted by 2.3%.
Andrew Wilson: ‘Scotland will be a bit worse’
During the first quarter output in the construction sector contracted by 3.4%, output in production contracted by 3.3%, and output in the services sector contracted by 2.2%.
New monthly GDP statistics have also been published today for the first time. These are being developed by the Scottish Government to help track the economic impact of the coronavirus (COVID-19) pandemic, and are badged as experimental statistics (not national statistics).
During the first quarter as a whole, and in the latest months, output has fallen in nearly every industry sector. The industries with the largest falls in output over the latest two months are those which have been required to close or where working at home is not possible.
Economy Secretary Fiona Hyslop said: “The coronavirus (COVID-19) pandemic is having an extremely serious impact on the economy right across the UK and – as these figures demonstrate – Scotland is no exception.
“Today I will join ministerial colleagues for a Labour Market Summit where we will talk with Skills Development Scotland and the Scottish Funding Council to ensure a co-ordinated approach to tackling unemployment and giving people skills for the jobs that will be needed as we emerge from the pandemic.”
Scottish Labour Leader Richard Leonard said: “Today’s statistics demonstrate plainly the enormous damage done to Scotland’s economy by the coronavirus pandemic.
“We are now deep into uncharted economic waters with the prospect of mass unemployment looming.
Richard Leonard: ‘state must play a central role’ (pic: Terry Murden)
“If action is not taken by both the UK and Scottish governments, with a clear plan to get the economy back on course, then we may be left with an economy in tatters. This is not just a downturn in the economic cycle, it is a structural shift in the economy.
“Manufacturing and new high-skill jobs must be at the heart of any recovery plan if we are to avoid losing an entire generation to unemployment and underemployment.
“If we are to protect our economy it is vital that we understand that the fundamental shift necessary during the lockdown is continued post-lockdown with the state playing an innovative and central role in supporting jobs and stimulating businesses.
“The scale of the crisis before us demands a transformational response from the Scottish Government that puts the wellbeing of the people of Scotland at the heart of the post-pandemic economy.”
Opposition calls for underspend to go to schools
The Scottish government underspent its £34.6 billion 2019-20 budget by £258 million.
Finance Secretary Kate Forbes has already reallocated £230m to support business, justice and various public works.
Opposition MSPs called for the remainder to be spent on schools.
The underspend amounts to 0.7%, against 0.9% the previous year.
Borrowing was £45m less than originally planned and the £717m collected from the Scottish Landfill Tax and the Land and Buildings Transactions Tax was the highest since the taxes were fully devolved, despite COVID-19 affecting revenues in March.
Kate Forbes: ‘sensible management’
Ms Forbes said: “The provisional outturn demonstrates that the Scottish Government spent more than 99 per cent of our budget in 2019-20 on the delivery of public services and supporting the economy.
“Our sensible financial management has provided us with additional flexibility to deal with the effects of COVID-19 and the sustained and damaging post-Brexit economic uncertainty.
“We will continue to maintain a firm grip on Scotland’s public finances and do all we can to protect Scotland’s economy and ensure that, as a country, we are back on our feet as quickly and as safely as possible.
“We have very limited room for manoeuvre within our budget, which is why I will continue to make the case to the UK Government for both an increase in funding and flexibility to allow the Scottish Government to respond fully to the COVID-19 crisis.”
Scottish Labour finance spokesperson Jackie Baillie said: “Given the underspend is £258 million, which is carried forward to this financial year, and Nicola Sturgeon has promised schools will get all the resources they need, the Scottish Government should put its money where its mouth is and allocate a portion of this money to fund the return to schools.