Lockdown could shrink Scottish economy by a quarter
Last updated 8th Apr 2020
There's a warning the Scottish economy could contract by up to a quarter if the current lockdown restrictions continue for a three-month period, according to the Fraser of Allander Institute at the University of Strathclyde in Glasgow.
Their report found there is likely to be "a long road to recovery'' from the "unprecedented'' impact on GDP from the coronavirus pandemic with GDP contracting by 20-25%
Major losses are predicted, with the construction sector contracting by 40-50%, production by 25-30% and services by 15-20%.
The agricultural sector is predicted to grow by 2-5%, though even a 5% growth in this sector will add less than +0.1 to overall Scottish GDP.
Within the production sector, the collapse in the oil price has had a severe impact on the mining and quarrying industry, while electricity and gas supply has seen a decline in demand of roughly 10%.
In construction, the researchers said they were seeing "a shutdown in much of the housebuilding industry, and the mothballing of a large part of private construction infrastructure and repair''.
Services, which is by far the largest part of the Scottish economy, will take a hit in retail and wholesale, transport and storage, and accommodation and food services, with the majority of the latter sector currently mothballed.
But there could be a "modest expansion'' in the public sector and a "fairly modest'' contraction in real estate.
The estimates are all predicted on a three month period of restrictions and are not an exact prediction for growth'' in Q2 of 2020, but "simply an illustration of the scale of the shock'' to the economy.
The report adds that "it might be many months or even years before we actually know the full extent of the effect of the shut down on the Scottish economy''.
Responding to the report, Scottish Conservative shadow finance secretary Donald Cameron MSP said: "A contraction of this magnitude would be brutal for jobs, growth and prosperity.
"Everyone understands the public health need for lockdown at the moment.
"But this warning makes it all the more essential that the Scottish Government gets its economic support package absolutely right.
"As it stands, businesses of all sizes, right across the country, are concerned that hasn't been the case.''
Labour's shadow Scottish secretary Ian Murray MP said: "This report demonstrates the devastating impact the coronavirus outbreak could have on Scotland's economy.
"Labour will act in the national interest and support the UK and Scottish governments where that is the right thing to do and provide constructive scrutiny when needed.''
He added: "When the virus is beaten, the economic damage will remain - and we must work together to prioritise people's jobs and livelihoods.''
Economy Secretary Fiona Hyslop said: "The Scottish Government is focused on minimising the long-term impact of Covid-19 on our economy by ensuring businesses and workers get as much support as possible during this difficult time.
"That is why in addition to UK-wide support for employees and the self-employed we have announced one-off grants for businesses to help protect jobs, prevent closures and promote economic recovery.
"The grant support is part of a package of measures worth £2.2 billion and more than 90,000 ratepayers across Scotland will be able to benefit.''
Hear all the latest news from across Tayside, Perthshire and Angus on Tay FM. Listen on FM, via our Rayo app, DAB, or smart speaker.