Coronavirus: Major recession means "return to normality" in a year is unlikely

The economic slump from Coronavirus in Scotland will be "much bigger" than the financial crisis of a decade ago and a return to normal within a year is "optimistic", experts have warned.

The construction industry has faced a virtual shutdown during the outbreak

It will far more difficult to get many "mothballed" firms up and running again when the lockdown ends than it was to impose widespread closures, the Fraser of Allander Institute has warned.

The prospect of a "V-shaped" recession where the economy picks up relatively quickly after businesses are given the green light has been played by the Strathclyde University-based think tank.

Hopes for such a scenario have now "largely disappeared" it states in a blog today.

"We are in the early stages of a major economic downturn . One that – at least in terms of the immediate hit to our economy – will be much bigger than the financial crisis."

It adds: "One school of thought had been that the mix of unprecedented government support, coupled with both the temporary nature of the public health crisis and the underlying resilience of our economy, might have been sufficient to ensure that, whilst we might experience a downturn in activity, the economy would pick-up quickly.

"So yes, a recession, but jump forward 12 months or so, and we’d be back to some form of normality. But this looks overly optimistic.

"A return to ‘normal’ looks far off."