Scots GDP up 5.7% in June – still 17% below February

Scotland’s gross domestic product (GDP) increased by 5.7% in June, according to statistics announced on Wednesday by the chief statistician.

The growth in June followed an increase of 2.3% in May — and falls of 19.2% in April and 5.8% in March.

Although output has increased for the last two months, it remains 17.6% below the level of February, before the economic impact of the coronavirus (COVID-19) pandemic.

“In June there has been a wider pickup in activity than in May, with output increasing in all the main industry sectors, and in most of the sub-sectors within these,” said the Scottish Government.

For the second quarter as a whole (April to June), GDP is provisionally estimated to have fallen by 19.7% compared to Quarter 1 (January to March), after a fall of 2.5% in Quarter 1.

Across the two quarters of contraction, output is estimated to have fallen by a total of 21.7% compared to 2019 Quarter 4.

“These figures are very similar to the contractions at the UK level,” said the Fraser of Allander Institute (FAI) at the University of Strathclyde.

“Two quarterly contractions in a row mean a recession is confirmed.

“Given the similarity to the UK contraction, this also means that Scotland is not performing well when compared internationally, with Spain the only country in the EU or G7 to see a bigger contraction since the end of last year …

“We can see that after falls in March and April, when the restrictions were at their peak, the economy started to expand slightly in May, and slightly faster in June, as more businesses were able to operate.

“The Scottish economy expanded 5.7% in June as a result of easing of restrictions. Interestingly, this was less than the 8% at the UK level …

“… a large number of businesses have reopened in recent weeks, so we are likely to see growth continue in the economy …

“The economy has started to grow during May and June, just as we have official confirmation that Scotland is in recession.

“We will continue to see growth in the economy through July and August, as more businesses open up.

“The impact of local lockdowns, at their current scale at least, will act as a drag on growth but is unlikely to outweigh the activity of businesses starting up again.

“However, despite the growth numbers we are likely to see, it is important to remember what this is actually measuring, and not allow it to hide to human cost that is coming as a result of this economic crisis.

“Coming down the track is a wave of unemployment, once the furlough scheme is removed and employers have to make tough decisions about their staffing levels in this new environment.

“So – when we come out of recession next quarter – which we almost certainly will – let’s not celebrate too much.

“Any commentator who suggests that this means we are well on the road to recovery will simply be wrong.”

The updates were contained in the third release of new monthly GDP statistics for Scotland, and the first to include a provisional estimate for the whole quarter.

These statistics have been produced by the Scottish Government to help track the economic impact of the COVID-19 pandemic, and are badged as experimental statistics.

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.