FIVE MORE YEARS OF MISERY
Jobs bloodbath is just the start, according to grim forecast
MORE than 220,000 Scots will be on the unemployment scrapheap by Christmas, according to a grim new economic forecast.
The jobs bloodbath is just the start of five years of economic chaos predicted for Scotland due to coronavirus.
The warning comes as it emerged at least 35,000 smaller independent firms are likely to collapse under severe financial pressures within the next 12 months.
A gloomy ‘state of the economy’ report published by the Scottish Government yesterday warns that the country will still be living with ‘scarring’ from the pandemic in 2025.
The document, by the country’s chief economist, says the pain will last even longer if local or international lockdown restrictions are reintroduced.
Scottish Conservative leader Douglas Ross last night urged Nicola Sturgeon to take decisive action to tackle the ‘biggest economic challenge in generations’ by launching a winter recovery plan focused on saving jobs and restarting growth.
The new report, by Dr Gary Gillespie, includes a ‘central scenario’ that economic activity will return to pre-crisis levels by the end of 2023.
However, it warns: ‘Over the period to 2025, we still expect a degree of scarring on the Scottish economy.
‘By quarter one of 2025, our current expectation is that economic activity will be around 3 per cent below pre-crisis trend.’
The report estimates that the country’s economy will contract by 9.8 per cent through the whole of this year compared with 2019. And it warns of a big rise in unemployment, which currently stands at 4.6 per cent.
It says: ‘Our central scenario shows that unemployment could peak at 8.2 per cent at the end of this year. However, the outlook remains uncertain and the risk of a reversal in the economic recovery and the effectiveness of the Job Support Scheme remain key uncertainties for the labour market.’
The report warns that Brexit and the ongoing uncertainty about a trade deal ‘could further test the viability of some firms that are already facing a gradual recovery from the pandemic’.
At present, 128,000 Scots are out of work.
A rise to 8.2 per cent unemployment would see nearly 100,000 more on the jobs scrapheap.
In a letter to the First Minister, Mr Ross said the UK Government has taken ‘decisive action’ by publishing a winter economy plan as Covid restrictions tighten. He said: ‘It is now time for the Scottish Government to show similar ambition with the powers it has to support our economy.
‘The public rightly demand action from both of our governments and do not want to see a passing of the buck on responsibilities between them.
‘That is why I am writing to you to set our expectation that the Scottish Government will publish details of its own plan to support the Scottish economy over the coming months.’
Tory proposals to revive the economy include setting up a hardship support fund for businesses impacted by local lockdowns; better support for workers of all ages to retrain and develop new skills; an airport testing regime to make international travel viable and protect jobs; and a Town Centre Adaptation Fund to allow such areas to prepare for the future easing of restrictions.
Miss Sturgeon yesterday said that the 9.8 per cent decline in gross domestic product (GDP) predicted by the chief economist was not surprising but would still be ‘the biggest reduction in output in modern times’.
She said: ‘That is why the Scottish Government welcomed some parts of the UK Government’s announcement last week about continued support for employment and businesses.
‘It is vital that some support for employers continues after the furlough scheme ends at the end of October.
‘But we believe much more is still required and we want to work with the UK Government constructively to that end.
‘We can’t get away from the fact that the pandemic will continue to have a significant and, to a large
‘Test the viability of some firms’ ‘Support must reflect impact’
extent, an unavoidable impact on our economy and support provided must reflect that.’
Meanwhile, separate research yesterday estimated that 35,070 small and medium-sized Scottish firms will close permanently in the next 12 months.
The Virgin Money Business Pulse, based on responses from 501 decision makers across the UK, found 17 per cent of firms are very likely or somewhat likely to close, rising to 24 per cent in the event of a second lockdown.
Comment – Page 18