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Scottish Business Monitor shows expected fall in activity and outlook

This report summarises some key results from our latest Fraser of Allander (FAI) Scottish Business Monitor, published in partnership with Addleshaw Goddard.

The survey was conducted over the period 1^st – 8^th April 2020. We engaged with almost 500 businesses from across the Scottish economy, in both different industries and parts of the country.

The results provide an important indicator of activity within the Scottish business community, and their reflections upon the current crisis.Continue reading

Update on claims to Universal Credit since the start of the shutdown

Yesterday we looked at the options for people who have seen their earnings disappear but are excluded from the UK Government’s Coronavirus Job Retention Scheme and the Self Employed Income Support Scheme. For those who can’t find alternative employment, the social security system will be the place many turn for support. And this is indeed what is happening. Universal Credit (UC) is where new claimants will head, and yesterday the DWP gave an update on UK caseload. Over the last fortnight, they have processed 950,000 successful claims, ten times the usual amount for a fortnightly period.

Unprecedented challenges to come for the Scottish economy – and whilst economy will recover long-term structural challenges starting to emerge

The coronavirus outbreak has already led to a sharp economic downturn in Scotland; one that will undoubtedly change the shape of our economy in the long-run, according to the Fraser of Allander Institute.

In its latest Economic Commentary, the Institute says the virus outbreak represents an ‘unprecedented shock’ to the global economy that will trigger a recession, but that the collective efforts of business and policymakers is to ensure that this is – as much as possible – a ‘v-shaped’ recession, with activity picking-up once the public health crisis passes.

March Nowcasts

It is a highly uncertain time for the global economy, with the increasing spread of Coronavirus (COVID19).

We’ve been asked by a number of people about the effect on the Scottish economy of COVID19. At this stage, it is difficult to tell how large the effect on economic activity in Scotland is or will be. In particular, given the significant uncertainty about the scale of the impact and in turn the government response.

On the wider issue of the impact on the global economy, there have been a number of interesting blogs. Rather than repeat the argument here, we would suggest reading Simon Wren Lewis’s blog on this here, a blog from the World Economic Forum here, this piece on The Conversation, and of course Nobel Laureate Paul Krugman in the New York Times.

Global pandemic fears notwithstanding, and in honour of tradition, we’ve produced updated nowcasts for the Scottish economy.

Scottish economy nowcast outlook

This week we received new data on UK GDP growth in Q4, which came in at a disappointing 0.0%.

Some of this was clearly due to Brexit uncertainty, but there are clearly other factors on the go this time around. For example, rather than rising significantly as per the previous pre-Brexit deadline in March 2019, manufacturing activity fell tipping that sector into recession. Continuing a consistent trend in recent years, business investment was weak once again, falling by 1% in the final quarter of the year.

Weaker global growth and a relatively fragile period for consumer confidence appear to be just as important explanations as any Brexit-induced uncertainty.