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4 December 2020 | Economy

State of the Nation: Vaccine boosts confidence, but retail faces difficult winter

 

State of the Nation: Vaccine boosts confidence, but retail faces difficult winter

Optimism has rise on the back of positive news about COVID-19 vaccines but, as SCDI’s State of the Nation briefing for December lays bare, the Scottish economy faces a difficult winter to get to the other side.

Business and consumer confidence have risen marginally in recent weeks. However, this is tied closely to hopes of a smooth and speedy rollout of vaccination against the virus, allowing public health restrictions to be eased or eliminated – and to a Brexit deal.

In the meantime, consumer spending has remained relatively weak during autumn and winter compared to previous years. The immediate outlook is especially critical for Scotland’s retail sector and its large workforce. Significant numbers of High Street jobs hang in the balance.

Moreover, unless an agreement is reached between the UK and the EU for the end of the Brexit transition period, there could be further widespread disruption to the economy, with negative impacts on trade, jobs and prices. Time is running out to secure and ratify a deal which avoids this scenario.

Key points

  • Despite five months of growth, Scottish economy remains 7.6% smaller than before pandemic
  • No-deal Brexit could cause inflation to rise sharply to 4%
  • China is only major economy expected to grow in 2020
  • Business and consumer confidence rose marginally, buoyed by hope for COVID-19 vaccines
  • Retail faces a winter crisis – sector has already shed 15,000 stores and 140,000 jobs across UK during pandemic
  • Unemployment could rise to 7.7% in 2021

Download our latest State of the Nation briefing below for all of the latest data and forecasts in one place.