Latest data on the Scottish economy - Update 15th January 2021

16th January 2021

Fraser of Allender Institute article on where they see the economy now.

In our last update back in November, the number of businesses trading and the outlook for business activity remained fairly stable. However, with restrictions tightening over the Christmas period, many businesses finished off 2020 with more uncertainty than hoped. The latest GDP data released this morning shows that the UK economy shrank by 2.6% in November - the first monthly decline since April.

With Scotland now in a national lockdown, similar to what we saw in March, all non-essential businesses are now closed with many employees back on furlough and all schools closed.

Again, the accommodation and food services sector, as well as the arts, entertainment and recreation sector continue to be the hardest hits sectors. Further lockdown measures, effective from tomorrow, in Scotland, will include tightened restrictions on click and collect services; takeaways; alcohol consumption; working from home; home maintenance; and, essential travel. All of which will impact businesses and workers across the country.

There is also added pressure on parents, carers and guardians working from home whilst juggling homeschooling.

With this new lockdown extremely similar to that of spring last year, there will be important implications for children and the education that they receive and there is a real risk that this lockdown could widen educational inequalities. Earlier this month, the Economics Observatory published an article on the impact of school closures on social mobility.

The impact of the pandemic on inequalities extends beyond education. This week, the Joseph Rowntree Foundation published their annual UK Poverty Report 2020/21 which highlighted that part-time workers, low-paid workers, lone parents - particularly women -, private renters and BAME households have been the hardest hit by the economic and health impacts of the ongoing Coronavirus pandemic.

Chart 1: Estimated share of businesses that are currently trading, broken down by industry, Scotland, 15th June - 13th December 2020: A large share of businesses across most sectors in Scotland are continuing to trade at normal levels however, the accommodation and food services, and, arts entertainment and recreation sectors continue to lag behind. Only 46% of businesses in the accommodation and foods services sector were trading at the beginning of December. With new restrictions, effective from tomorrow, on takeaway services, the outlook for this sector remains poor.

See other charts HERE