Vaccine impact awaited as short term remains tough
Shops and other businesses are waiting to reopen (pic: Terry Murden)
The longer-term impact of COVID-19 on the Scottish economy is becoming clearer as we get more and better data uncovering the scarring effects of twelve months of lockdown on businesses, communities and workers.
Key sectors of the Scottish economy, especially for rural communities, have been among the worst affected. According to official Scottish Government data, two out of every three workers in accommodation & food services and arts, entertainment & recreation remain furloughed.
Although the vaccine rollout and hope for a strong summer recovery has sent business optimism surging to record levels, the short-term outlook remains tough. Many businesses are still battling for survival.
The Scottish Retail Consortium reports that the total volume of retail sales is nearly a quarter lower than a year ago. Uncertain consumers are putting off non-essential purchases. The Office for National Statistics says 28% have no or less than three months of cash reserves. Only 53% seem certain that they will survive the next three months.
But the most concerning data to emerge in recent weeks revealed that over 21,500 jobs (9% of the total number of jobs) have been lost in the North East of Scotland since 2015.
Nearly half were lost during the pandemic in a region hit hard by the gradual decline of the oil & gas industry and a year of restrictions on the tourism & hospitality sector. The transition to a net zero economy is well underway – with winners and losers. Are Aberdeen and Aberdeenshire ready to pivot and bounce back?
Meanwhile, UK exports to the EU fell by over 40% and imports from the EU fell by nearly 30% as the Brexit transition period ended in January. Is this a mere temporary blip as the new bureaucratic system beds in? Or does it indicate a permanent hit to our exporters? Time (and data) will tell.