Border problems persist
Patchy signs of recovery as economy reawakens
Seafood exports have been hit by the Brexit change
Our State of the Nation briefings are beginning to reveal how Brexit and COVID-19 are reshaping trade flows and working patterns.
The end of the UK’s transition period led to a big drop in UK exports (40.7%) and imports (28.8%) with the EU in January. It was not immediately clear whether this was because of temporary ‘teething problems’ at the border as businesses adjusted to new customs and border processes.
However, the latest data for February is concerning and suggests that this is in fact permanently damaging to trade. Exports of food and live animals, for example – affecting key sectors of the Scottish economy including our iconic agricultural, seafood and whisky industries – are now a third lower in 2021 compared to 2020.
Meanwhile, at home, the jobs market remains ‘broadly stable’, says the ONS. Unemployment in Scotland is unchanged at 4.4%. Many of us are still working from home, but this varies significantly across the country.
People in more rural or more deprived communities are much less likely to experience home working, underlining Scotland’s stubborn challenges with inequality and connectivity.
Home working has been most common in Edinburgh (43.1%), much lower in Falkirk (33.6%) and Glasgow (23.4%), but the very lowest in South Ayrshire (10.8%). As a recent study from Deutsche Bank underlines, the impact on productivity is mixed, at best.
With the re-opening of retail, tourism and hospitality, optimism has been growing for a strong recovery this summer.
Scotland’s private sector has finally returned to growth, while £180bn in additional savings have been built up by UK households during the pandemic, which some hope could be released in a consumer spending spree.
But the storm clouds over the Scottish economy have not dissipated yet. Our long road to recovery is just beginning.