Scotland’s GDP “returns to pre-new Corona level by next year” – Daily Business

Output recovery prospect

Scotland’s economy is expected to return to pre-coronavirus levels early next year, according to new data.

KPMG has revised Scotland’s 2021 GDP forecast from 5.5% to 6.4%. This is underpinned by manufacturer investment and the oil and gas business, which is experiencing rising global demand and rising oil prices.

Growth forecasts for 2022 have been slightly revised down from 5.8% to 5.2%, but services companies are expected to support more consistent growth as Scotland recovers pre-pandemic levels of production in early 2022. ..

KPMG predicts that Scottish financial and business services companies will contribute primarily to the country’s GDP growth in the long run, with the relative impact of Brexit on the Scottish financial services sector compared to London. We predict that smallness is an important factor.

KPMG Regional Chairman Catherine Burnett of Scotland said: Advance.

“How quickly we get out of lockdown along the Scottish Government roadmap in the summer can affect our forecasts, but GDP growth will not return to pre-pandemic levels by early next year. Still incredibly encouraging. “

Despite positive forecasts, Scotland’s GDP growth is projected to be slightly below the UK as a whole in 2021 and 2022.

Catherine Burnett

Catherine Burnett: “Incredibly Encouraging”

Inflation will accelerate this year due to rising cost pressures and the temporary withdrawal of tax cuts, but KPMG’s analysis shows that it will slow towards the second half of next year, averaging 1.7% in 2021 and 2022. It will be 2.1%.

KPMG expects the Bank of England to keep interest rates unchanged in the short term so that the economy can fully recover and mitigate the downside risk of the outlook.

Bankruptcies peak at around 8,000 at the turn of the year and can then return to around 4,000 quarterly.

Ms. Burnett pointed out that the collections are not evenly shared. “It’s important to remember that some sectors of the Scottish economy, such as tourism, hospitality and retail, are more pandemic-influenced than others,” she said.

“The end of government support schemes can occur at the same time as the recovery in demand in these sectors, but there are still steep mountains to climb to overcome the turmoil caused by Covid-19.

“This difficult environment, combined with factors such as rising cost pressure, can delay Scotland’s economic recovery.”

Yael Selfin, Chief Economist at KPMG UK, added: Some sectors, such as manufacturing and construction, have already regained most of what was lost last year, but others, such as hospitality, are doing well now.

“But the potential for new variants of the virus that do not respond to current vaccines is less serious than it used to be, as the economy adapts to operations under social distance restrictions, but it remains a downside risk. Rising bankruptcy levels, which are expected to withdraw government support programs, could also impact recovery.

KPMG’s June Scotland and UK Economic Forecast

2020 2021 2022
Scotland -9.8% 6.4% 5.2%
England -9.8% 6.6% 5.4%

Source: ONS, Scottish Government, KPMG analysis.

Scotland’s GDP “returns to pre-new Corona level by next year” – Daily Business

Source link Scotland’s GDP “returns to pre-new Corona level by next year” – Daily Business

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