Scotland will face a recession so severe that it could claim up to 60,000 jobs, according to a new report.
The economy will contract by 0.4% next year — the worst figure for 19 years — with financial services bearing the brunt of the downturn, the Ernst & Young Scottish Item Club claimed in its annual forecast.
The forecast’s author, Dougie Adams, says the recession will see unemployment rise by at least 50,000 to about 124,000, a level last seen in the late 1990s. The private services sector would account for 20,000 of the total, while 11,000 jobs could go in manufacturing and 7,000 in construction.
He warned that if the fallout in the financial sector were more severe, the economy could slow by as much as 1% next year, with the total number of jobs lost approaching 60,000. In that case, it would grow by only 1% in 2010 and the loss of output over the next two years would be equivalent to £5bn.