No GDP recovery until 2023 despite clawback
Fiona Hyslop: ‘positive steps’
Scotland’s economy has recovered half the fall in GDP since lockdown in March but may still not return to pre-pandemic levels until the end of 2023, a report has found.
Unemployment is expected to increase to 8.2% by the end of this year, as the UK Government’s new Job Support Scheme will provide less extensive support than its predecessor and is not likely to be as effective at suppressing unemployment as the original furlough scheme.
The data emerges in the latest State of the Economy report, published by the Scottish Government’s chief economist Gary Gillespie.
GDP should continue to recover into the third quarter, with uncertainty for the the fourth quarter exacerbated by possible failure to agree a trade deal with the EU
Scotland’s economic output could fall 9.8% this year, with global economic uncertainty remaining elevated.
Economy Secretary Fiona Hyslop said: “We are taking every possible step to protect jobs as we work to rebuild our economy. This report highlights some positive steps towards this, but our economy remains fragile and recovery will be slow.”
A survey by Virgin Money estimates that 35,070 Scottish SMEs will close permanently in the next 12 months as a result of the coronavirus crisis, with this figure rising to 54,776 in the event that a second national lockdown is introduced.
Across the UK as a whole, the survey, which was conducted in early September, revealed that 616,000 UK SMEs say it is likely their business will close permanently in the next 12 months as a result of the coronavirus crisis, with a second lockdown pushing this figure to 960,000.
Two-thirds (66%) of SMEs said their profits were lower in April because of COVID-19 disruptions, including 21% whose profits took a hit of more than 50%.