Jobless stable

Scottish economy may take three years to recover

scottish economy

Scottish employment figures have improved

Scotland’s economy may take three years to return to pre-pandemic levels, according to the Fraser of Allander Institute.

Its central scenario predicts a return to “normality” by August 2022, while the most optimistic prediction suggests February 2022 based on a successful vaccine programme.

But under a pessimistic scenario the Scottish economy would not recover to its former level until September 2023.

Whatever outcome emerges, unemployment is expected to rise to 7.5% by the second quarter of next year – double the current rate – as the furlough scheme is rolled back.

“With unemployment soon to rise and a renewed squeeze on wages across the public and private sector, it will feel like Scotland is in a recession for some time yet,” said the institute, based at Strathclyde University

The forecast is in line with predictions for other economies. Japan will suffer a smaller contraction this year than initially forecast but won’t return to pre-coronavirus pandemic levels until at least early 2022, economists in a Reuters poll said.

The world’s third-largest economy is expected to shrink 5.3% in the current fiscal year ending in March.

Analysts expected the economy to rebound 3.4% next fiscal year, unchanged from the November survey, but a recent resurgence in coronavirus cases could slow the recovery.

Scots jobless falls

For the period August to October, Scotland’s employment rate estimate has risen to 74.8% and the unemployment rate estimate has fallen over the quarter to 4.2%, the biggest fall of any UK region or nation.

Across the UK redundancies rose to a record high of 370,000. The unemployment rate rose from 4.8% to to 4.9%, the Office for National Statistics said.

Economists warned that leaving the EU without a deal risks a sharp rise in unemployment.

British Chambers of Commerce head of economics Suren Thiru said: “Failure to achieve a UK-EU trade deal risks adding to the longer-term structural unemployment caused by the pandemic by limiting the competitiveness and viability of some industries.”

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