State of the economy: September 2020

This report summarises recent developments in the global, UK and Scottish economies and provides an analysis of the performance of, and outlook for, the Scottish economy.

This document is part of a collection

Scotland Summary

  • Scotland’s GDP fell 19.4% in the second quarter of 2020, following a 2.5% fall in the first quarter, with sharp falls across the services, production and construction sectors.
  • More recent data for July showed that GDP grew 6.8% in July, its third consecutive month of growth, and GDP is 10.7% below its pre-Covid level in February.

Business activity returned to growth in August.

  • As lockdown restrictions have eased and the economy has gradually reopened, business activity has strengthened.
  • The number of Scottish businesses currently trading picked up from 80% in June to 95% in August.
  • The Scottish PMI survey for August reported expansion in private sector activity for the first time since February.
  • Growth in business activity was broad based, but remained slightly stronger in the Manufacturing sector.

Labour market impacts from COVID are still emerging.

  • In May to July 2020, Scotland’s employment rate rose slightly to 74.3% and the unemployment rate rose to 4.6%.
  • However, the Job Retention Scheme has supported around 1 in 3 workers in Scotland and around 15% of the workforce was still on furlough leave in August.
  • As the scheme winds down, employment is expected to fall and unemployment to rise.
  • In August, the Claimant Count in Scotland (Jobseekers Allowance and some Universal Credit claimants) was 225,800, a rate of 8.0%. The number of claimants has broadly doubled since March, a rise of over 100,000 claimants.

GDP projected to strengthen in the second half of 2020.

  • Scottish Government analysis projects GDP to grow in the second half of 2020 but to fall by 9.8% over the year as a whole and for unemployment to rise to 8.2% in Q4 2020.
  • In the medium term, output is projected to recover gradually back to its pre-COVID level in 2023-24.
Scottish Monthly GDP by sector
Line graph showing total monthly GDP growth index in Scotland between January 2019 and July 2020
Scottish Estimates of share of businesses currently trading and share of workforce on furlough leave
Line graph showing % of businesses currently trading and % of workforce on furlough leave in Scotland
Purchasing Managers’ Index: Scottish New Business
Bar and line chart showing the net balance of Scottish business activity by sector
Purchasing Managers’ Index: Scottish Employment
Bar and line chart showing the net balance of Scottish Employment levels by sector



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