The full scale of the economic impact of Covid-19 on the island of Arran has been revealed in a new report. The analysis in this report has been conducted by the Fraser of Allander Institute (FAI) at the University of Strathclyde. The FAI is a leading academic research centre focused on the Scottish economy.
The report was commissioned in July 2020 by North Ayrshire Council and can be viewed here.
The key findings of the report are:
- The current outlook for economic growth in Arran is dominated by the immediate impact of Covid-19. Although many of these economic shocks should be temporary, there is a risk that these disruptions may have longer-term implications. That is, as the furlough and self-employment income support schemes are scaled back and job losses increase, Arran could see long-term scarring effects in the local labour market.
- Arran is a unique island economy in North Ayrshire and its industrial mix has made it particularly exposed to the ongoing Coronavirus pandemic. A large number of businesses in Arran depend upon so-called ‘social spending’ and its tourism industry along with tourism-facing industries have been disproportionately impacted by lockdown measures and subsequent capacity constraints in restaurants, bars and cafes.
- The Fraser of Allander estimate that GVA in Arran was just over £77m in 2018.
- Arran, like most island economies, is limited by its infrastructure and rurality and is highly dependent on its ferries to transport commuters and tourists.
- The Fraser of Allander estimate that, on average, each day of ferry operation contributes just under £170,000 to the island’s economy.
- Arran’s GVA in the first half of 2020 has fallen by 33% as a result of a lower number of ferry passengers compared to the first half of 2019. In cash terms, GVA in the first half of 2020 was lower by circa £9.3m compared to the first half of 2020. The effect was most severe in April and May when monthly GVA fell by around 41% compared to the same months last year. As government begins scaling back its furlough and self-employment income support schemes, the true impact of Covid-19 on unemployment and living standards will begin to crystallise. Unfortunately, due to capacity constraints, a large number of businesses in Arran remain reliant upon government support despite eased lockdown measures.
- National policy must recognise that the Arran economy is very different to the North Ayrshire and Scottish economy.
North Ayrshire Council launched its own Economic Recovery and Renewal Approach earlier this month to build back better, fairer and greener through Community Wealth Building and is committed to supporting our islands to recover, working alongside partners. National intervention and support is also required to support island economies at this difficult time.