Three-month lockdown could see Scotland’s economy shrink by a quarter, experts warn

SCOTLAND’S economy could shrink by as much as a quarter if the coronavirus lockdown continues for three months, a leading economic think-tank has warned.

The Fraser of Allander Institute at Strathclyde University estimated that if the unparalleled restrictions were to last to the summer then “Scottish GDP could contract by 20-25 per cent”.

The recession caused by the 2008 financial crash wiped out 4% of Scottish GDP.

The coronavirus modelling suggested construction will be the hardest hit, shrinking 40-50% as all non-essential building sites are closed.

Production could be down 25-30%, and the services sector down 15-20%.

Agriculture, however, is expected to grow by 2-5%.

The institute stressed the figures were not exact predictions, but illustrated “the scale of the ‘shock’ we are seeing to the economy”.

The “completely unprecedented” nature of the shutdown pointed to a “very large” impact, it said. Although some sectors would bounce back after a temporary contraction, it

cautioned the extent of the rebound was unclear and “it is likely to be a long road to recovery”.

The Scottish Government recently offered a £2.2 billion support package for business to help it through the crisis.

Scottish Tory MSP Donald Cameron said: “A contraction of this magnitude would be brutal for jobs, growth and prosperity.

“Everyone understands the public health need for lockdown at the moment.

“But this warning makes it all the more essential that the Scottish Government gets its economic support package absolutely right.

“As it stands, businesses across the country are concerned that hasn’t been the case.”

Shadow Scottish secretary Ian Murray added: “This report demonstrates the devastating impact the outbreak could have on Scotland’s economy.

“Labour will act in the national interest and support the UK and Scottish governments where that is the right thing to do and provide constructive scrutiny.

“We will get through this, and when we do we can’t go back to the same divisive politics. We must work together to prioritise jobs and livelihoods.”