Economy ‘down by almost a quarter’ amid coronavirus crisis

Scotland’s economy has shrunk by almost a quarter since the coronavirus outbreak began, with new figures showing “unprecedented” declines in almost every industry.

It is estimated GDP has fallen by 23% since February, new monthly figures have revealed.

This includes an 18.9% drop in April – the first full month that restrictions on business and travel were in place.

The economy is estimated to have contracted by 5% in March despite Scotland only being in lockdown for the final week of that month.

The Scottish Government stressed the new monthly GDP figures are “experimental” data and “all results are provisional and subject to relatively high levels of uncertainty”.

“When viewed across the two months of March and April, the total fall in output since February is provisionally estimated as 23% and output has fallen by an unprecedented amount in nearly every industry of the economy,” the report said.

It includes a slump of 85% for the accommodation and food sector over the two months, according to the data, while the arts, culture and recreation sector was hit with a 51% fall.

“The coronavirus pandemic is having an extremely serious impact on the economy right across the UK and – as these figures demonstrate – Scotland is no exception.”
Fiona Hyslop, Economy Secretary

Economy secretary Fiona Hyslop said: “The coronavirus pandemic is having an extremely serious impact on the economy right across the UK and – as these figures demonstrate – Scotland is no exception.”

In the production sector, output is estimated to have fallen 18.8% in April and 4.6% in March – while in manufacturing the drop was 25% over the two months.

For construction, the fall in output was estimated as being 39.8% in April, after a drop of 6.2% in March.

In the service sector – which makes up the bulk of Scotland’s economy – output was said to have declined by 17.6% in April after a fall of 5% in March.

Here the report said “sharp falls” in some areas had been “partially offset” by growth among supermarkets and online retailers.

Quarterly GDP figures covering the period January to March were also published, with these showing Scotland’s economy suffered a bigger hit than the UK’s as a whole.

It shrank by 2.5% in real terms in the first three months of the year, compared to a drop of 2% across the UK.

The fall in GDP comes the day after it emerged unemployment in Scotland had increased by 30,000 over the period February to April to stand at 127,000.

Ms Hyslop said since the start of the coronavirus crisis “the Scottish Government has been working tirelessly to keep businesses afloat and ensure as many people as possible keep their jobs, and we will continue to do that”.

Ministers have pledged more than £2.3bn to help businesses across the country.

Ms Hyslop said: “Yesterday, we announced a £230m return to work package to help stimulate Scotland’s economy following the pandemic.

“This initiative, covering construction, low carbon initiatives, digitisation and business support, will help to create jobs and generate a flow of work for businesses.”

She said it is now “essential” the Scottish Government is given more powers so it can “properly manage the response to the crisis as we move towards recovery”.

Ms Hyslop added the “last thing our businesses need is further economic turmoil as a result of a no-deal Brexit”, saying this was why the Scottish Government had made repeated calls for UK ministers to extend the transition period beyond the end of this year.

“We are now deep into uncharted economic waters with the prospect of mass unemployment looming.”
Richard Leonard, Scottish Labour leader

Scottish Labour leader Richard Leonard said there needs to be a “transformational response from the Scottish Government that puts the well-being of the people of Scotland at the heart of the post-pandemic economy”.

He warned: “We are now deep into uncharted economic waters with the prospect of mass unemployment looming.

“If action is not taken by both the UK and Scottish Governments, with a clear plan to get the economy back on course, then we may be left with an economy in tatters.”