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Scottish Economy

Latest data on the Scottish economy – Update 29th January 2021

Scotland, like the rest of the UK, remains under a national lockdown with over half of Scottish businesses with furloughed staff and a rise in businesses expecting to make staff redundant in the coming weeks.

This week, the Scottish Government published the latest GDP figures for Scotland which showed an estimated contraction of 1.4% in November as increased restrictions were reintroduced across most of the country – this is the first decline since Scotland’s economic recovery began last summer.

The latest headline employment figures for Scotland were published on Tuesday by the ONS, with the Scottish Government’s official summary released yesterday. Scotland’s unemployment rate stood at 4.4% during the period from September – November 2020 – up 0.6-percentage points (p.p.) on the previous year. However, furlough support continues to mask the real impact of the economic crisis on employment. The number of people claiming Universal Credit and Jobseekers allowance started rising again in December and remains significantly above the levels seen last year.

While the end of the ongoing pandemic seems far away yet, the crisis may have longer-term impacts, persisting long after our economic recovery. Earlier this week the Economics Observatory published an article on the potential long term impact that the ongoing pandemic could have on firm productivity.

Table 1: Real-time indicators dashboard

Source: Scottish Government, BICS, Adzuna Labour Market Stats

Chart 1: Estimated share of businesses that are currently trading, broken down by industry, Scotland, 15th June 2020 – 10th January 2021: The accommodation & food services and arts, entertainment, and recreation sectors saw the sharpest decline in the number of firms currently trading as a result of the ongoing national lockdown. Businesses in the information and communication, transport & storage, and professional, scientific & technical sectors have so far proved resilient to the current lockdown

Source: Scottish Government, BICS

Chart 2: Estimated share of workforce on furlough leave, broken down by industry, Scotland, 1st June 2020 – 10th January 2021: Accommodation & food services and arts, entertainment, & recreation continue to be the sectors with the highest share of employees on furlough. They also saw the largest increase in furloughing due to the most recent lockdown. Other sectors of the economy have so far only seen modest increases in the share of furloughed employees.

Source: Scottish Government, BICS

Chart 3: Number of employees on payroll from PAYE RTI, UK, January 2020 – December 2020: The number of employees on payroll declined more severely in Scotland compared to the rest of the UK during the first lockdown and this persisted into the end of last year. The number of employees in Scotland grew month-on-month in December but remains 2.8% below the levels seen last January.

Source: ONS

Chart 4: Growth in median monthly pay from PAYE RTI, UK, January 2020 – December 2020: Median monthly pay increased gradually in the summer months last year as the economy began opening back up however, has experienced slow growth in recent months. In December Scottish median pay grew by 0.8% month-on-month – stronger than the rest of the UK – with the increase in median pay primarily driven by the change in the composition of jobs over the past few months.

Source: ONS

Chart 5: Number of people on Universal Credit, Scotland, December 2013 – December 2020: The number of people on Universal Credit has risen by almost 6,900 between November and December 2020. This was the largest monthly increase since July 2020, but still not close to the magnitude seen in April last year. It is important to note that the rise in claimant count includes people who are unemployed and also some who are in employment. 

Source: DWP

Chart 6: Claimant Count as % of working age population, Scottish local authorities, December 2019 – December 2020:  In terms of increases in claimant count, the most impacted local authority was Glasgow City, which saw a 3.8-p.p increase in the share of working-age people on Universal Credit and Jobseekers Allowance in December 2020, compared to December 2019. This was followed by Aberdeen, and West Dunbartonshire, whilst Inverclyde, Shetland Islands, and Orkney Islands were the least impacted.

*This data may be affected by geographical definition issues, therefore may not tally with other claimant count data. 

Source: ONS/NOMIS

Chart 7: Timing of redundancies amongst businesses who expect to reduce their workforce numbers within the next 3 months, Scotland, 30th November 2020 – 10th January 2021: Many Scottish businesses are still expecting to cut their staff numbers within the next few weeks. Among businesses expecting to reduce their workforce, the share of those expecting to make redundancies in 2-4 weeks has risen by over 24-p.p. since early December.

Source: Scottish Government, BICS

Note on our real-term indicators analysis:

We review newly available data each fortnight and provide a regularly updated snapshot of indicators that can provide information on how the economy and household finances are changing. This allows us to monitor changes in advance of official data on the economy being released and also to capture key trends that will be missed by measures such as GDP. Each fortnight we investigate new sources from known data sources and use publicly available data.

Authors

Ben is part of the Knowledge Exchange team within the Institute and has experience working on a wide variety of projects for public and private sector organisations. He has a degree in Economics and is currently studying for an MSc on the Scottish Graduate Programme in Economics.

Frank graduated from the University of Strathclyde in 2019 with a First-class BA (Hons) degree in Economics. He is currently studying on the Scottish Graduate Programme MSc in Economics at the University of Edinburgh.

He has experience from a variety of economic policy institutions including the European Commission in Brussels, the Slovak Central Bank and the Ministry of Finance.

Adam is an economist at the FAI who works closely with FAI partners and specialises in business analysis. Adam's research typically involves an assessment of business strategies and policies on economic, societal and environmental impacts.

Find out more about Adam.