SCOTLAND'S economy has made a slight recovery - but unemployment will rise and it could take three years to get back to what it was before the pandemic, according to the country's chief economist.
Gary Gillespie, chief economist to the Scottish Government, has today published the latest State of the Economy report.
It states that unemployment is expected to rise to 8.2% by the end of the year, with Westminster's replacement to the furlough scheme “not likely to be as effective at suppressing unemployment” as the original.
The economy has recovered half of the fall in GDP experienced since lockdown began in March.
This recovery is expected to continue into the third quarter of the year, but there is “greater uncertainty” about the three months to follow, with concerns over a second wave of the virus and the possibility of a No-Deal Brexit.
Economic output could fall by 9.8% this, the report states.
Economy Secretary Fiona Hyslop commented: “We are taking every possible step to protect jobs as we work to rebuild our economy. This report highlights some positive steps towards this, but our economy remains fragile and recovery will be slow.
“Currently we have over 217,000 people still on furlough in Scotland, and what the Chancellor set out last week does not go far enough.
“With only a matter of weeks to go until the end of the furlough scheme, businesses have already taken difficult decisions and now need greater certainty and more time to plan.
“Our analysis suggested 61,000 jobs would be saved if the furlough scheme was extended by eight months, and it appears that from the detail we have that this scheme will not provide the support that was hoped for.
“As well as clarity on funding for devolved governments, we also need more support for our hardest hit sectors like events, hospitality and tourism, and flexible support that recognises the impact of future local lockdowns.
“As we have stressed before, we have responded to Covid-19 without the fiscal levers we require. Not only is the UK Government denying us the appropriate financial powers needed to fully respond to the pandemic, it has also removed any clarity about how much funding we will receive by deciding to scrap this autumn’s UK Budget.
“This underlines the need for us to have full financial powers to ensure we are in control of our own finances to help rebuild our economy.”
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