Of course, the vast majority of business owners understand the best way to protect the economy in the long run is to control the spread of the virus and accelerate the vaccination roll-out. But this doesn’t offset the scale of the immediate challenge.
I HAVE been asked on many occasions to compare the economic costs of Covid with those of Brexit. On one level, there is simply no comparison. During the height of lockdown, economic activity in Scotland fell by a fifth, and did so in record time. Many businesses in retail, hospitality and tourism have seen their entire livelihoods taken from them.
That 2020 has been a year without precedent scarcely needs saying. Should you need further evidence, consider this. The Scottish Government’s budget this financial year is on course to be almost one quarter (£7bn) higher by the end of 2020/21 year than it anticipated when it set out its initial plans in February.
Recent weeks have seen growing frustration within the business community about the government’s response to the economic crisis.
It’s a little over six months since the World Health Organisation declared a global pandemic. The ensuing economic crisis has been severe: the Scottish economy shrunk by nearly a fifth between April and June. Across the UK, there were 156,000 redundancies in the three months to July, the largest increase since the financial crisis.
History is likely to judge the UK Government’s furlough scheme as one of the most effective policy responses to any economic crisis that we have seen in recent history.
Last week, we had confirmation of the scale of the shock to hit Scotland’s economy in recent months. Output fell by nearly 20% over the quarter to June on the back of a contraction of 2.5% in the first three months of the year.
Difficult choices remain in the weeks and months ahead and as with any shock to the economic system, not all businesses will survive. As the UK Chancellor has reiterated, he (nor any other politician for that matter) is not able to save every job.
This month marks 45 years since the first publication of the Fraser of Allander Economic Commentary. Thanks to the team at the Strathclyde library, past editions are now archived online.
The effects of COVID-19 continue to wreak havoc to the economy. The latest ONS data points to around 1 in 5 Scottish companies currently closed or paused trading. Of those still operating, around half have seen turnover fall by over 20%.
