Glimmer of hope for economy as rebuilding starts
...but harsher restrictions could still halt growth
SCOTLAND’S economy has started to bounce back from lockdown, but is still lagging behind last year’s levels.
A rise of 16 per cent on the third quarter of the year has fuelled optimism that the economy can recover from the ravages of the pandemic.
Latest figures for the three months to the end of September show Scotland’s economy enjoyed a boost compared to the second quarter of this year, when the country was in the grip of the full lockdown.
The construction sector increased its output more than any other.
But the country’s gross domestic product (GDP), was still 9.5 per cent lower than the same time last year.
And experts have urged caution and predict a further hit in the coming months following the decision to significantly increase lockdown restrictions again, with hospitality and tourism likely to be hardest hit.
Tracy Black, director of CBI Scotland, said: ‘Economic growth bounced back in quarter three following the easing of lockdown measures [but] we’re likely to see the recovery taking a step back in quarter four.
‘Hospitality, retail and tourism firms have been amongst the most severely impacted by the pandemic, and the second hit caused by re-intensifying restrictions may prove too much for some to bear.
‘ While recent employment figures for Scotland were encouraging relative to the rest of the United Kingdom, the labour market remains fragile and fear of increased job losses over the winter remains a live concern.’
Miss Black added: ‘The recent good news on vaccines gives hope for the future and may give some stimulus to spending.
‘At the same time, businesses want to see a clear strategy for early 2021 and assurances that a return to the same cycle of stringent restrictions is unlikely.’
The latest figures, which were published by the Scottish Government yesterday, show that GDP in Scotland grew by 16 per cent in real terms between July and September.
This was slightly higher than 15.5 per cent of growth across the UK. The biggest increase in the most recent quarter was in construction, where GDP soared by 52 per cent, compared with 18.6 per cent in production, 13.8 per cent in services and 2.8 per cent in agriculture and fishing.
The biggest growth for a subsector was i n distribution, hotels and catering, within the services sector, where premises were able to open up again but have subsequently been hit hardest by restrictions.
Scottish Secretary Alister Jack said: ‘While today’s figures show improvement, these reflect a period when restrictions were eased. We are now facing new restrictions across Scotland.
‘The UK Government has continued to take unprecedented action to support jobs and businesses in Scotland from the extension of the furlough scheme to business loans to expansion of employment programmes as part of our Plan for Jobs.’
He added: ‘This direct support is on top of £9.5billion additional funding provided to the Scottish Government.
‘The UK Government is also directly procuring and investing in vaccines, we were the first country in the world to roll out the Pfizer vaccine and clinical trials of the Valneva vaccine developed right here in Scotland have begun this week.’
SNP Economy Secretary Fiona Hyslop said: ‘We know that businesses across Scotland have faced considerable challenges this year and we have worked hard to provide critical support at every stage.
‘On top of £2.3billion support announced at the start of the pandemic, we have provided almost £1.2billion in economic recovery funds and £570 million in our recent packages of business support.
‘While we are doing everything in our power to support business, it is incredibly disappointing that the UK Government is creating more uncertainty by refusing to rule out a No Deal Brexit at the end of the transition period on December 31.’
‘Hope for the future’