Politics

Scottish economy shrank as Omicron caused ‘difficult time’ for business



SCOTLAND’S economy shrank in December as the Omicron variant gripped the country, almost returning GDP to pre-pandemic levels.

New official estimates from the Scottish Government said Scotland’s onshore GDP fell by 0.4 percentage points in the last month of 2021.

It means output remained just 0.1% above the pre-pandemic level of February 2020.

However GDP grew by 1.3% in the final quarter of last year, and by 7% overall in 2021, although this followed a contraction of 10% in 2020 because of Covid and lockdown.

SNP economy secretary Kate Forbes said the figures reflected a “difficult time” for business.

The latest Office for National Statistics figures said UK GDP fell 0.2 points in December, returning UK GDP to the same level as in February 2020.

Output in Scotland’s services sector, which accounts for three-quarters of the onshore economy, was flat in December, known technically as 0% growth. 

Consumer facing services fell  by 2.5%, while health, education and public services output increased by 0.9%, and output in all other services increased by 0.3%.

The production sector, which accounts for a sixth of Scotland’s economy, shrank by 3.3% in December. 

However output in the construction sector, which accounts for around 6% of the economy, grew by 1.9% in December.

Ms Forbes said: “The emergence of Omicron at the end of last year meant that December was a difficult time for many, which is reflected in these figures. 

“However, the resilience and ingenuity of our business community has lessened the impact, and it is encouraging to see sectors such as construction continue to grow.

“While we know our recovery remains fragile, and that many businesses have had an incredibly challenging time over the last two years, the Scottish Government is firmly focused on supporting our economy to recover.

“Since the start of the pandemic, businesses have benefited from more than £4.4 billion of support. This includes COVID-19 non-domestic rates reliefs which have saved businesses around £1.6 billion in reduced rates bills since 1 April 2020.”

 

 




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