Scottish economy contracted by 19 per cent in Q2 2020

Fiona Hyslop
Fiona Hyslop

The Scottish economy contracted by 19.4 per cent in the second quarter of 2020 as the COVID-19 pandemic swept the country, new figures show.

Economy Secretary Fiona Hyslop said the figures, which reveal a 21.1 per cent contraction over the year compared to Q2 2019, show the “extremely serious impact” of the pandemic.

Output in the construction sector contracted by 41.5 per cent in the second quarter, output in production contracted by 15.7 per cent, and output in the services sector contracted by 18.7 per cent.

Ms Hyslop said: “We have worked hard to protect Scotland’s economy and ensure that as many people as possible keep their jobs and this is backed by a package of support to businesses that totals over £2.3 billion.

“Our Programme for Government, published this month, sets out plans for a stronger, more resilient and sustainable economy – with a laser focus on creating new, good, green jobs.

“As part of that, our £60 million Youth Guarantee will ensure every young person has access to a job, education or training and we have also announced plans to increase support for older workers to re-skill in growth areas, such as low carbon industries.

“Despite these efforts, the winding down of the UK Government’s furlough scheme will put even more jobs at risk – with over 217,000 people still furloughed in Scotland – and we remain disappointed the UK Government has declined to extend the Job Retention Scheme beyond October.

“It is now essential that the Scottish Parliament is granted the additional powers it needs to properly manage the response to the crisis as we move towards recovery.

“It is also the case that the last thing our businesses need is further economic turmoil as a result of a no-deal Brexit. That is why we have repeated our calls for the UK Government to agree an extension to the transition period.”

Tracy Black, director of CBI Scotland, said: “The fall in GDP reveals the sheer scale of the hit to the Scottish economy caused by lockdown. While we all knew that leisure, tourism and retail bore the brunt of the initial wave, these figures not only show how swift and severe the impact has been but also that no sector was left unscathed – with vital industries like health and education, along with the rest of our all-important services sector, hit particularly hard.

“With a rise in infections, localised lockdowns coming in and out of force, and slow progress in Brexit negotiations, Scottish businesses will understandably be anxious about what the rest of 2020 holds in store. Getting a Brexit deal and building a successor to the hugely successful Job Retention Scheme are key to securing recovery in the near-term.

“If we are serious about doing everything in our power to protect firms, jobs and living standards, we need the UK and Scottish governments working together with real agility to further protect both lives and livelihoods. The coming weeks and months will be critical to our success.”

Tags: Coronavirus

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