‘Particularly difficult outlook’ for tourism, oil and gas in Scotland

Key sectors of Scotland’s economy, including the oil and gas industry and tourism, could be facing a “particularly difficult” future due to Covid-19, a report has warned.

A new briefing paper produced by the Scottish Council for Development and Industry (SCDI) warned of the impact of the pandemic on areas including oil and gas, aviation, tourism and hospitality.

“These sectors are highly significant for Scottish GDP in terms of their contribution to employment, productivity and growth,” the paper said.

The SCDI stated: “The outlook for Scotland’s oil and gas, aviation and tourism and hospitality sectors looks particularly difficult.”

As it published the paper, Labour’s shadow Scottish secretary Ian Murray urged the Scottish Government to increase coronavirus testing.

He tweeted: “Businesses at risk of collapse and unemployment on the rise. New report from @SCDInews shows devastating impact of #COVID19 on Scottish economy.

“It’s so important the Scottish Gov gets on top of the testing shortfall to mitigate long-term economic damage.”

Meanwhile, the SCDI said there was an “urgent need for government support and funding to be accelerated to save businesses and livelihoods”.

It made the call in its State of the Nation report for May as it claimed the UK’s productivity performance was already “poor” before the coronavirus pandemic started.

It noted forecasts from both the Scottish Government and the UK Office for Budget Responsibility that GDP could fall by about a third as a result of the virus outbreak.

While it said Scotland’s labour market was in “good health” prior to the virus, it said this had “changed radically in March and April”.

Early indications suggest Scottish employers shed jobs at the fastest rate in over two decades in March, the SCDI noted, saying this had happened at a faster rate than in UK-wide firms.

Just over half (51%) of Scottish businesses have reduced staff numbers while 81% have reduced staff working hours, the report said.

Looking at the oil and gas industry, it stated: “The global brent crude benchmark price for oil briefly and dramatically fell below zero dollars and remains at historic lows.

“Fuel demand has dried up due to travel and movement restrictions across the world. Oil and Gas UK analysis suggests one in five people who work in the sector, or around 50,000 workers, could lose their jobs.

“In tourism and hospitality, Scottish hotel occupancy fell by 80% or more. The events economy has been decimated with the cancellation of sporting, summer and conference events, such as Edinburgh Festivals and COP26.

“In aviation, airlines are projecting large losses with airport total passenger numbers down 90%.”

The SCDI said: “There is an urgent need for government support and funding to be accelerated to save businesses and livelihoods.”

A Scottish Government spokesman said: “This report demonstrates the unprecedented impact that Covid-19 is having on our economy and labour market.

“The Scottish Government’s response to Covid-19 is saving lives, however, we are acutely aware of the impact that the health measures we have put in place to contain the spread of virus are having on people and businesses throughout the country.

“During this period of uncertainty we are committed to protecting people’s livelihoods and the productive capacity of the economy. This will help economic activity and employment to recover when physical distancing measures are eased.

“Our total support for Scottish business now stands at £2.3 billion and we will continue to do everything we can to support employers and employees at this time and to prepare for recovery when it is safe to reopen the economy.”

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