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The country’s GDP is almost a fifth lower than it was prior to lockdown, according to official figures. The latest economic data, revealed by the Scottish Government today, demonstrate two consecutive quarters of negative economic growth.
Performance declined by 2.5 percent in the first three months of the year and 19.7 percent in the second quarter.
Provisional figures indicate some improvement in June, but GDP “remains 17.6 percent below the level in February, prior to the lockdown measures which were introduced in March”.
Estimates suggest GDP increased by 5.7 percent in June compared with the previous month.
There has been a “stronger and more widespread pick-up” in economic activity than in May, with output now said to be increasing “in all the main industry sectors”.
Dr Liz Cameron, chief executive of the Scottish Chambers of Commerce, said the economic fall sends significant alarm bells ringing.
She said: “The collapse in Scotland’s GDP in the second quarter sets alarm bells ringing even if the fall was expected.
“The 19.7 percent decline from April to June makes Scotland’s and the UK’s economies among the worst performing in Europe.
“These figures confirm the Scottish economy is in deep recession and intervention is required now to prevent real and lasting damage to the jobs market.
“The GDP stats for the month of May from the Scottish Government show a modest rise in economic activity.
“However, the disparity with pre lockdown figures clearly demonstrate the harsh reality facing companies across Scotland who are faced with the challenge of stimulating demand and managing new ways of operating.
“The Scottish and UK Government must work with business to accelerate investment to stimulate demand and protect jobs as well as providing long-term targeted support for the most affected sectors.”
Dr Cameron urged UK Chancellor Rishi Sunak to act on the statistics, adding he should “make an immediate reduction in employers’ national insurance contributions”.
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She said: “Without rapid intervention in the form of fiscal stimulus packages as well as cost-cutting efforts such as rates holidays, we fear that Scotland’s economic landscape may never recover to previous levels.”
The report continues: “The unprecedented nature of this drop in output can be contrasted to the financial crisis and recession in 2008 and 2009, where GDP decreased by around four percent over the course of 18 months.”
In the services sector, which forms the largest part of Scotland’s economy, GDP is estimated to be up 4.3 percent in June, after growing 1.1 percent in May and falling 17.5 percent in April.
Construction output was estimated to have grown by more than a third (36.3 percent) in June, after an increase of 11.4 percent in May.
But performance in the sector did fall 49 percent in April.
Fiona Hyslop, Scotland’s Economy Secretary said the figures show “the devastating and unprecedented impact that the necessary lockdown restrictions have had on the economy”.
She said the Scottish Government has “worked hard to protect Scotland’s economy and ensure that as many people as possible keep their jobs”, with more than £2.3 billion invested in a business support package.
Ms Hyslop repeated Scottish Government calls for the job retention scheme – in which more than 700,000 workers in Scotland have been furloughed – to be extended beyond October.
She said this should happen “particularly for those hardest hit sectors which face significant long-term challenges”.
Alister Jack, Scottish Secretary, said: “These figures confirm the significant impact of coronavirus on Scotland’s economy.
“The UK Government has put in place unprecedented measures to support people, right across the country, through the pandemic.
“We are supporting almost 900,000 jobs in Scotland through the pioneering furlough and self-employed schemes and have loaned more than £2.3billion to 65,000 Scottish businesses.
“This is on top of an extra £6.5billion of funding for the Scottish Government.”
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