Scots economy may regain lost ground in just two years
The Scottish economy could completely regain the ground lost during the Covid-19 pandemic within the next two years, according to a best-case scenario put forward today.
Analysis from KPMG also suggests that a continuing successful vaccine rollout and a potential post-restrictions “consumer bounce” could see Scotland’s recovery outpace that seen across the wider UK.
Scotland’s economy took an estimated 9.6 per cent hit in 2020, compared with a Ukwide drop in GDP of 9.9 per cent. But KPMG said Scotland could see annual GDP growth in 2021 of up to 5.5 per cent, against 4.6 per cent Uk-wide, and up to 5.8 per cent in 2022, compared with 5.6 per cent across the UK as a whole.
However, although KPMG said the data offers some “real hope and optimism” for Scotland’s prospects, it cautioned that there are concerns that unemployment may rise significantly towards the end of 2021, driven by the long-term effects of Brexit and the winding down of government support measures, including the furlough schemes.
Catherine Burnet, KPMG’S regional chair in Scotland, said although it was reassuring to see that GDP could be back to pre-covid levels of growth within two years, the figures don’t account for the many jobs and valued businesses that may be lost forever.
She said: “Last year we warned of a potential ‘twospeed’ recovery with some regions of Scotland suffering far harder than others. As the picture has become clearer, we’re finding that there’s less of a geographical division and more of a sector-by-sector imbalance.
“While the country’s alreadyflourishing tech, biotech and medical industries have continued to grow and attract international investment, there’s no escaping from the devastation that Covid has created in hospitality, retail and travel and tourism.”
Burnet said the Scottish Government’s roadmap out of restrictions and the COP26 environmental summit in Glasgow in November “offer real hope that we have an opportunity to build back and regain lost ground with a focus on a truly sustainable, green recovery – but to achieve this we’ll need business and political leaders to work more collaboratively than ever before on a strategy that ensures Scotland’s long-term success”.
Meanwhile,aseparatereport out today has warned that one in five exporters has temporarily halted sales to European Union customers after new trading rules took effect at the start of this year – and one in ten exporters is considering stopping sales to Europe permanently.
Thefederationofsmallbusinesses survey also found the same proportion have established, or are considering establishing, a presence within an EU country to ease their exporting processes.
FSB national chairman Mike Cherry said: “At a moment when small firms are doing all we can to return to growth and get our economy firing on all cylinders again, those that do business internationally are being hit with some incredibly demanding, unfamiliar paperwork.
“Three months on from the end of the transition period, what we hoped would prove to be teething problems are in danger of becoming permanent, systemic ones.”