SCOTLAND’S economy could shrink by as much as a quarter if the coronavirus lockdown continues for three months, a leading economic thinktank has warned.
The Fraser of Allander Institute at Strathclyde University estimated that if the current restrictions last to the summer “Scottish GDP could contract by 20-25%”.
Its modelling suggested construction would be the hardest hit, shrinking 40 to 50% as all non-essential building sites are closed during the pandemic.
Production could be down 25 to 30%, and the all-important services sector down 15 to 20%.
Agriculture, however, was expected to grow by 2 to 5%.
The FAI stressed the figures were not exact predictions, but were nevertheless “an illustration of the scale of the ‘shock’ we are seeing to the economy”.
It said the scale of the shutdown was “completely unprecedented”, and pointed to a “very large” impact on the economy.
Although some sectors would bounce back after a temporary contraction, it cautioned the extent of the rebound was unclear and “it is likely to be a long road to recovery”.
Scottish Tory MSP Donald Cameron said: “A contraction of this magnitude would be brutal for jobs, growth and prosperity.
“Everyone understands the public health need for lockdown at the moment.
“But this warning makes it all the more essential that the Scottish Government gets its economic support package absolutely right. As it stands, businesses of all sizes, right across the country, are concerned that hasn’t been the case.”
Shadow Scottish Secretary Ian Murray added: “This report demonstrates the devastating impact the coronavirus outbreak could have on Scotland’s economy.
“Labour will act in the national interest and support the UK and Scottish governments where that is the right thing to do and provide constructive scrutiny when needed.
“We have to plan for the long-term economic recovery - which will take years.
“We will get through this, and when we do we can’t go back to the same divisive politics of old.
“When the virus is beaten, the economic damage will remain - and we must work together to prioritise people’s jobs and livelihoods.”
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