The Scottish economy has been through an unprecedented year: the contractions we have seen during lockdown periods are enormous by historical standards.
After a fall in GDP of 23% between February and April, we saw rapid growth through the Summer as the economy opened back up. The recovery flattened off during the Autumn as restrictions were re-imposed, and a fall moving into the end of the year as restrictions got even tighter.
The expectations for early 2021 are for further falls in output, before growth returns in the Spring as restrictions are able to be eased.
One of the features of this economic crisis has been the differential impacts on different sectors. Businesses which have been able to adapt quickly to do much of their business remotely have been much less harder hit, whereas those who rely on social spending and face-to-face interaction have been much more severely impacted.
With restrictions are likely to continue for some sectors for at least the first half of 2021, it is likely that this “twin-track” recovery will continue. Of particular concern are the impacts on the hospitality sector, which employs generally younger and lower paid workers.
Of course, Government policy interventions, in particular through the Job Retention Scheme, have protected millions of jobs throughout the period of the pandemic. Despite this, we know that thousands of jobs have been lost. Much of the impacts on employment are likely to manifest down the track as Government policy initiatives are rolled back.
Economic Perspective articles:
- Perspective 1 – Scottish Budget Guide, Ludovic Maguire and Adam McGeoch
- Perspective 2 – Mental health and wellbeing during the COVID-19 pandemic, Lenhart et al (2021)
- Perspective 3 – The policy response to Coronavirus: theory and application; Emma Congreve, Sophie Haldane & Mphatso Kumwenda