Spending spree tipped to drive revival of Scottish economy

A spending spree by Scotland's higher earners could help revive the country's beleaguered economy when lockdown measures are eventually lifted, the country's economic watchdog says.

The Scottish Fiscal Commission predicts that GDP will return to growth this year as the vaccination programme is rolled out and shops and hospitality begin to open up again.

This will be followed by a surge in growth to 7 per cent in 2022, according to its forecasts, although Scottish GDP is not forecast to return to its pre‑Covid level until 2024.

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But before that, the economy north of the Border is expected to shrink by 5 per cent in the first quarter of this year as a result of the current lockdown.

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Dame Susan, chair of the commission, said on Friday that as lockdown restrictions began to ease last summer, the economy in Scotland did experience a rapid "bounce back" in growth after falling by 19 per cent during lockdown.

Asked what is likely to drive the forecast return to growth, she said: "Higher earners have, for the most part, been able to save during this period of lockdown and are likely to start spending."

The sectors which have been hardest hit are the retail, hospitality and leisure sectors, Dame Susan said.

"A number of these are smaller enterprises as well and may find it much harder to weather the storm," she said.

The economic chief was speaking after finance secretary Kate Forbes set out her budget for 2021/22 at Holyrood on Thursday.

David Stone, from the commission, said lockdown had hit spending levels.

"We don't expect the economy to rapidly to get back to where it was before and don't expect GDP to reach its previous 2019 level until 2024," he said.

"So although 7 per cent [in 2022] looks like quite rapid growth, it gets us back to a point which is still some way below where we were before.

"It really just reflects that the lockdown restrictions means that people really can't do things that they would have done previously – they can't spend money on things that they would have normally spend money on.

"As the restrictions lift, they will allow some of that activity to pick up again."

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