Growth forecast

Scots economy may make up lost ground in two years

scottish economy

Scotland’s growth may outpace UK average

Scotland’s economy could completely regain lost ground within the next two years and outpace the UK-wide average, according to the latest economic forecasting from KPMG. 

It is estimated the country’s economy took a 9.6% hit in 2020, broadly in-line with forecasts, as the pandemic impacted almost every sector. Across the UK, there was a drop in GDP of 9.9%.

But the latest best-case analysis from KPMG suggests that a continuing successful vaccine rollout and a potential post-restrictions ‘consumer bounce’ could see Scotland’s GDP growth rising 5.5% this year, compared to 4.6% UK-wide, and up to 5.8% in 2022, compared with 5.6% across the UK.

While the data offers some real hope and optimism for Scotland’s prospects of a post-Covid economic recovery, there remains concerns that unemployment may rise significantly towards the end of 2021.

This will be driven by the long-term effects of Brexit and the winding down of government support measures, including the furlough schemes.

For industries including hospitality and retail, any long-term return to growth could come too late.

The latest data from the SRC-KPMG Retail Sales Monitor warns the sector witnessed only modest improvements in sales between January and February, with year-on-year takings down by more than 24%.

The Scottish Licensed Traders Association has cautioned that more than 10% of the workforce is likely to be lost this year in Scotland’s bar, restaurant and licensed venue industry.

Catherine Burnet, KPMG’s regional chairman in Scotland, said: “Our latest economic forecasting undoubtedly offers some optimism, but with a big slice of caution.

“While it’s reassuring to see that GDP could be completely back to pre-Covid levels of growth within two years, the figures don’t account for the many jobs and valued businesses that may be lost forever as the pandemic rumbles on.

“Last year we warned of a potential ‘two-speed’ recovery with some regions of Scotland suffering far harder than others. As the picture has become clearer, we’re finding that there’s less of a geographical division and more of a sector-by-sector imbalance.”

SMEs plan investment

More than a quarter (27%) of SMEs surveyed plan to invest more in their businesses in the year ahead than during a typical pre-pandemic year, underlining their focus on growth in a post-Covid-19 future, according to a recent survey by Virgin Money.

Over a third (35%) of SMEs plan to invest between £10,000 and £10 million this year, a rise on 32% from 2020. 

The research is reported in the Virgin Money Business Pulse, which provides a comprehensive insight into the performance of the UK’s SMEs and the environment in which they operate.

One in four SMEs halt EU exports

A new FSB survey of more than 1,400 small firms finds that almost one in four (23%) of exporters have temporarily halted sales to European Union (EU) customers.

40% of licensed premises have outdoor facilities

Separate research published today shows that around two in five licensed premises will have some kind of space to trade from when the market reopens for outside trading.

The latest edition of the Market Recovery Monitor from CGA and Alix Partners shows about 41,100 premises in Britain have a garden, terrace, car park or other area in which they could potentially seat guests—38.2% of all sites.

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