Latest Data On The Scottish Economy - Update 11th September 2020

13th September 2020

The latest up date on the economy from Fraser of Allender Institute.

This update provides a snapshot of new data on the Scottish economy and households based on data released in the last fortnight.

Last month we had official confirmation that Scotland, like the UK, was in a recession in the first half of the year. Today's GDP figures for the UK highlight strong growth at the start of the third quarter in July of 6.6%. However, the economy is still 12% smaller than in February and this magnitude of growth should be expected as the economy is recovering from a very low base. For example, output in the accommodation and food services industry grew by 140% in July but is producing 40% of what it was in February.

Economic recovery from this pandemic is therefore unlikely going to be ‘V-shaped'. Instead, we are likely to see a ‘K-shaped‘ recovery with different sectors experiencing varied recovery times. The accommodation & food services sector remains the most notably affected by the pandemic. The Eat Out to Help Out scheme has provided some support for this sector; however, the degree of support has varied across UK regions. Eat Out to Help Out ended on the 31st August however, many restaurants are still running similar discounts in September to attract customers. We await to see how demand will respond once these discounts come to an end.

Additionally, the number of vacancies remains below trend, but improvements can be seen month-on-month. The government's furlough scheme now only covers 70% of employee wages, dropping to 60% in October, and is due to close at the end of next month. The real impact of Covid-19 on the labour market is expected to be seen in the coming months once this scheme comes to an end.

Last week we spoke with economist Jeremy Peat to discuss the current economic situation and how things are looking over the next few months and years. You can listen to our podcast with Jeremy here.

Chart 1: Answers to the question ‘In the last two weeks, how has the coronavirus (COVID-19) pandemic affected your business's turnover, compared to what is normally expected for this time of year?', 10th August - 23rd August 2020: Scottish businesses continue to report lower turnover than usual compared to the UK overall, with over half of businesses reporting decreased turnover compared to what is normally expected at this time of the year.

Read the full article HERE