Economic Commentary [June 2021]

The recent opening of the Scottish economy enabled by the swift vaccine rollout, has led to expectations for Scotland's economic growth being revised up to 5.9% in 2021 and 3.5% in 2022, according to the latest Economic Commentary by the Fraser of Allander Institute at the University of Strathclyde. In the Deloitte sponsored Economic Commentary, the Fraser of Allander Institute now forecasts that the economy will reach its pre-pandemic peak in the summer of 2022, three months earlier than was forecast in March. While recent pauses in the roadmap to ease restrictions have been challenging, particularly for those sectors and regions hardest hit by the pandemic, the Scottish economy has seen significant opening up since late April. This has been facilitated by the vaccine deployment, which has seen 82% of the adult population receive their first dose. Despite the optimism, there are also risks to recovery which could provide headwinds to growth. The dislocation in global trade was significant due to the pandemic and the UK’s exit from the EU. This has led to major issues for manufacturers and others trying to rebuild these supply chains. While the economy faces significant changes as it moves through to the recovery phase, the way people work has also changed, particularly for those who have been able to work from home during the pandemic. As some businesses begin to consider a part-time return to the office, alongside homeworking practices, it remains to be seen how persistent these changes will be. This edition of the Commentary continues the discussion about the future of work, examining the sectoral differences of both prevalence and possible persistence of new ways of working.