Scottish Economy Enters Recession Despite Recent Upturn

The Scottish economy has officially entered a period of recession despite recent months having seen an upturn in overall output.

GDP across the country increased by 2.3 per cent in May and by 5.7 per cent in June, according to initial estimates published by the Scottish government.

However, the months of March and April were extremely tough both from the perspective of the public health crisis around coronavirus and from the point of view of economic activity.

Indeed, despite the upturns of recent months, the overall scale of the Scottish economy was still 17.6 per cent smaller at the end of June than was the case prior to the pandemic hitting the UK.

The worst affected month as far as economic output is concerned was April, when Scotland’s GDP slumped by as much as 19.2 per cent.

A 5.8 per cent GDP downturn in March meant that the economy officially shrank during the first quarter of this year and with the second quarter having followed suit Scotland has now officially entered a recession.

Parts of the economy have been affected differently by the virus crisis in recent months, with the construction sector having seen a near 50 per cent downturn in April, followed by a 36.3 per cent expansion in June.

Meanwhile the services sector, which accounts for the lion’s share of Scotland’s economic activity, grew by 1.1 per cent in May and 4.3 per cent in June, after having contracted by 17.5 per cent in April.

Some of the impacts of the pandemic and the lockdown have been softened through government support and protection measures but nonetheless the impact of coronavirus has been huge across the country.

Millions of people have seen their incomes hit either as a result of the pandemic or the lockdown and many thousands are increasingly reliant on debt to make ends meet.

First minister Nicola Sturgeon said during a press briefing that the latest economic figures “present the scale of the economic challenge we face”.

She added that the data also underlines the importance of governments in Edinburgh and London taking action to protect jobs and help rebuild the economy.

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