Economy could take four years to get over second wave, experts say
Scotland’s economy may not return to its pre-coronavirus level until summer 2024 if there is a second wave of the disease, economists have warned.
A new report from experts at the Fraser of Allander Institute think tank said the “Scottish economy is now in its deepest recession in living memory”.
It added recovery could take four years in the worst-case scenario if there was another spike of cases and stringent lockdown measures had to be reimposed.
In the most optimistic scenario, assuming the easing of restrictions goes “smoothly”, it said it is possible the Scottish economy could get back to pre-crisis levels by late 2021 or early 2022.
The report comes after figures last week showed GDP in
Scotland plummeted 18.9 per cent in April.
Although the report said this fall was “unprecedented” it added it was “broadly what was expected given the scale of the mothballing of large sectors of the economy”.
The number of Scots in receipt of the Universal Credit also rose to more than 440,000 in May – more than double the total of 185,000 recorded in the same month last year. With more than 750,000 people in Scotland either furloughed or being supported through the UK Government’s selfemployment scheme, the think tank fears a possible “raft of redundancies and business closures” when this state assistance starts to be scaled back.
Its latest economic commentary said: “The immediate priority for many businesses is survival.
“But expect a spike in closures and job losses as firms look ahead to the rolling back of the furlough support later in the year.”
The report said UK Government support has provided an “invaluable safety net” during the crisis, with “around £10 billion of funding support for the Scottish economy through additional resources for the Scottish Government and various business support schemes”.