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
Mairi is the Director of the Fraser of Allander Institute. Previously, she was the Deputy Chief Executive of the Scottish Fiscal Commission and the Head of National Accounts at the Scottish Government and has over a decade of experience working in different areas of statistics and analysis.
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. Adam also leads the FAI's quarterly Scottish Business Monitor.
Find out more about Adam.
Anton is a Research Assistant at the Fraser of Allander Institute. He is also studying for an M.Sc. in Economics from the University of Edinburgh. His research interests cover environmental and political economics, as well as computational macroeconomics.
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.
James is a Fellow at the Fraser of Allander Institute. He specialises in applied analysis of trade and climate change. His work includes the production of economic statistics to improve our understanding of the economy, economic modelling and analysis to enhance the use of these statistics for policymaking, data visualisation to communicate results impactfully, and economic policy to understand how data can be used to drive decisions in Government.