KPMG suggests Scottish economy could recover quicker than rest of UK - but not all sectors will recover at same rate
Scotland’s economic recovery from the impact of the coronavirus pandemic could accelerate quicker than elsewhere in the UK, KPMG has predicted.
On 28 March, KPMG forecast that the Scottish economy took an estimated 9.6 percent hit over 2020 across almost every sector, in contrast to the 9.9 percent UK average.
The forecast looked at the economic growth of the UK across the next two years, with the “best case” scenario of continued vaccine roll out and a post-lockdown ‘consumer bounce’, allowing Scotland’s GDP to grow by 5.5 percent in 2021, with the UK-wide growth lagging behind at 4.6%.
Scotland would grow again to 5.8% in 2022, compared with 5.6% across the UK.
However, KPMG's regional chairwoman in Scotland Catherine Burnet said the optimistic forecast should be taken with "a big slice of caution”.
Burnet added: "While it's reassuring to see that GDP could be completely back to pre-Covid levels of growth within two years, the figures don't account for the many jobs and valued businesses that may be lost forever as the pandemic rumbles on.”
In 2020, KPMG also predicted that certain regions across Scotland would take longer to recover than others, but Burnet said this “two speed” recovery was looking more likely to be felt across sectors than across regions.
“As the picture has become clearer, we're finding that there's less of a geographical division and more of a sector-by-sector imbalance,” she said.
"While the country's already flourishing tech, biotech and medical industries have continued to grow and attract international investment, there's no escaping from the devastation that Covid has created in hospitality, retail and travel and tourism.
She added: "The Scottish Government's road map out of restrictions, coupled with our latest economic modelling and the Cop26 summit in Glasgow this November, offer real hope that we have an opportunity to build back and regain lost ground with a focus on a truly sustainable, green recovery.
"But to achieve this we'll need business and political leaders to work more collaboratively than ever before on a strategy that ensures Scotland's long-term success."
COP26, which takes place in Glasgow in November, is expected to attract around 300,000 delegates from nearly 200 different countries.
However, GMB Scotland secretary Gary Smith was less optimistic, as he said the renewables sector is overestimated for in the forecasts as, he says “forecasts for Scotland's economic future factor a green recovery that doesn't exist and for which there is no plan whatsoever.”
Smith added: "Scotland has one of the biggest offshore wind sectors in the world but almost no jobs in the manufacturing and fabrication that supports it, we export those green jobs to the rest of the world.
"In our biggest city Glasgow, which will host COP26, we have an environmental crisis in cleansing and refuse, but instead of investing in more jobs to tackle it the council signed off another cuts budget.
"Optimism isn't warranted when you look at what's actually happening, and without a proper jobs plan and investment strategy the outcome won't be recovery, it will be failure."
The forecast comes four days after the Scottish Government vowed to invest a further £25million into supporting charities and communities to recover from the pandemic.
On 24 March, the Scottish Government announced its support for recommendations made by the Social Renewal Advisory Board, in it’s report ‘If not now, when?’
The government has now announced investment of £25 million, including £13.5 million to help the Third Sector recover and build on the support given to communities, as well as a further £6.7 million to tackle fuel insecurity.
Announcing the government’s support for the report’s recommendations, Communities Secretary Aileen Campbell said: “Our response highlights new commitments to delivering 100,000 more affordable homes by 2032, increasing parental employment support, and increasing the world-leading Connecting Scotland programme to now reach 60,000 people and get them online by the end of this year.
“We have already invested £1 billion over the course of the pandemic to support our communities and I am pleased we will now invest an additional £25 million.”
The £25 million investment is dependent on the outcome of the Scottish Parliament elections, on 6 May.