Scottish GDP will not return to pre-Covid levels ‘until 2024’

Scotland’s GDP will not return to its pre-coronavirus levels until 2024, while economic activity will be reduced by 5% this quarter, according to the latest forecast.

The Scottish Fiscal Commission (SFC) said GDP was expected to grow by 2% this year if restrictions ease and 7% in 2022.

Its forecast, published alongside the Scottish Budget on Thursday, said the criteria for a “Scotland-specific economic shock” had been met, giving the Scottish Government the ability to borrow £300 million more and removing limits on the ability to withdraw from reserve funding.

The SFC said additional Covid funding going to the Scottish Government rose from £3.5 billion in April to £8.6 billion in December.

Scottish GDP is not expected to fully recover until the start of 2024.

As well as the impact of lockdowns on economic activity, a reduction in global trade and the scarring effects of long-term unemployment will also lead to slower growth.

SFC chairwoman Dame Susan Rice said: “The last year has been difficult for us all, and I’m afraid it’s clear the coming year will continue to be tough.

“With rising unemployment, the pain has also not been shared equally. But we do see the economy gradually recovering as the restrictions are relaxed.

“It’s not an easy time to set a budget as there’s a lot of uncertainty about the pandemic and its impact.

“Unlike the UK Government, the Scottish Government has to balance its budget each year.

“This makes managing the Scottish public finances really hard when the funding from the UK Government is likely to vary greatly through the year.”