Economy struggles ‘until 2023’

SCOTLAND’S economy may not return to pre-pandemic levels until 2023, a report by the chief economist has suggested.

Economic output north of the border is 10.7 per cent lower than before coronavirus began to spread in Scotland, having recovered after falling 22.1 per cent in the first two quarters of the year.

The new State of the Economy report, written by Gary Gillespie, suggests it may take several years to return to normal.

The report said: “Recovery in the medium term is still expected to be gradual, with economic activity returning to pre-crisis levels by the end of 2023.

“The path for the economy remains fragile, particularly as restrictions on business and household activity are required or reintroduced to combat the virus.

“As our focus remains on the protection of the public from the virus, we must ensure that as much economic activity remains open (and viable) to ensure that business can continue to operate and provide income and employment for people during this ongoing (and difficult) period.”

Gillespie warns unemployment could reach 8.2 per cent in Scotland, due to the UK Government’s new job support scheme, which starts on November 1, when furlough ends.

The report described the job support scheme as “less generous” than furlough.

Economy Secretary Fiona Hyslop said the end of furlough could cost 61,000 jobs, adding: “This report highlights some positive steps towards this but our economy remains fragile and recovery will be slow.”