UK Economy - Fraser of Allander Institute Blog

Home » UK Economy

This isn’t a v-shaped recession….

Just three weeks ago, the OBR published forecasts of 1.1% growth in 2020.

How times have changed.

On the very same day, the Chancellor warned us to ignore these forecasts and to prepare for a ‘significant impact’ on our economy.

Since then the situation has deteriorated further. Hopes that the recession that we are now in would be ‘v-shaped’ – i.e. a sharp downturn followed by a bounce-back in the months to follow – have sadly largely disappeared.

The latest data, and emerging insights from on the ground, suggests that the effects of this crisis are going to be long-lasting.

In this blog we assess why.

A brief comment on coronavirus and the Scottish economy…

We’ve been asked in recent days for our take of the impact of the coronavirus on the Scottish economy.

Of course, it goes without saying that the economy is very much secondary to the health implications and the risks to individuals and families.

So before going any further, it’s important that we take a step back. This is primarily about people – people being ill and not being able to work or because they have been advised to self-isolate; and people not travelling, congregating or spending like they would normally because they are self-isolating or trying to limit their exposure to the virus.

The UK Budget, Coronavirus and Wellbeing – Podcast

Our first Fraser podcast looks at the UK Budget announced on the 11th March 2020. Emma Congreve, David Eiser and Graeme Roy have been looking at what was announced and here present some thoughts on what the Budget means for the economy and how it will impact on Scotland.

This podcast pulls together the analysis we would have otherwise presented at our planned Budget Event which we decided to cancel as a sensible precaution given current Coronavirus concerns.

Budget 2020: Scottish implications

This was one of the most significant UK budgets in recent years – although it has very limited ‘Scottish specific’ implications.

What a difference a decade makes. Less than 10 years ago (in June 2010) George Osborne set out plans for a major fiscal consolidation which aimed to reduce public spending below 40% of GDP by 2015/16. The plans involved reducing the fiscal deficit to 1 per cent of GDP by 2015, as part of plans to prevent the debt to GDP ratio exceeding what was framed as an unsustainable level of 70%.

Today Rishi Sunak commended his expansionary budget which will see the deficit rise to 2.4% of GDP this year whilst the government now seems quite relaxed about a debt-to-GDP ratio stabilising closer to 80% than 70%. And these forecasts were largely made before major concerns about the impact of coronavirus materialised.Continue reading

UK Budget – our initial take!

The Budget has – quite rightly – been overshadowed by the ongoing coronavirus emergency.

At times like this, the normal budget day issues that tend to interest us economists, from Barnett consequentials through to the latest policy initiative or forecasts from the OBR, are very much secondary.

The channels through which the spread of coronavirus can feed through to the economy are complex and wide ranging.

But the Chancellor did caution that we should expect for a ‘significant impact’ on the economy.

Impacts will vary by firm, sector, market-place and supply-chain. The ability of each business to flex their activity over time to cope with disruption will be crucial.