SCOTLAND’S economy may not return to its pre-coronavirus level until summer 2024 if there is a second wave of the disease, economists have warned.
A new report from experts at the Fraser of Allander Institute think tank said the “Scottish economy is now in its deepest recession in living memory”.
It added recovery could take four years in the worst-case scenario if there was another spike of cases and stringent lockdown measures had to be reimposed.
In the most optimistic scenario, assuming the easing of restrictions goes “smoothly”, it said it is possible the Scottish economy could get back to pre-crisis levels by late 2021 or early 2022.
The report comes after figures last week showed GDP in Scotland plummeted 18.9% in April.
Although the report said this fall was “unprecedented” it added it was “broadly what was expected given the scale of the mothballing of large sectors of the economy”.
With more than 750,000 people in Scotland either furloughed or being supported through the UK Government’s self-employment scheme, the think tank fears a possible “raft of redundancies and business closures” when this help starts to be scaled back.
Its latest economic commentary said: “The immediate priority for many businesses is survival.
“But expect a spike in closures and job losses as firms look ahead to the rolling back of the furlough support later in the year.”
The report said Government support has provided an “invaluable safety net” during the crisis, with “around £10 billion of funding support”.
But it warned: “Should there be a second wave and reintroduction of more stringent restrictions, the hit to the economy will be all the greater ...We estimate that this could mean the economy does not get back to pre-crisis levels until mid-2024.”
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