NICOLA Sturgeon has said there are “reasons for optimism” over the extension of the UK Government’s furlough scheme for workers affected by the lockdown.

The First Minister suggested Chancellor Rishi Sunak was too smart to allow the furlough to end next month as planned and cause a wave of avoidable redundancies.

“I am hopeful that we will see some positive developments in that regard,” she said at the Scottish Government’s daily briefing on coronavirus

Ms Sturgeon was speaking after the Chancellor told MSPs on Tuesday that he would not hesitate “to act in creative and effective ways to support jobs and employment”.

Since the Coronavirus Jobs Retention Scheme was launched in April, it has paid out £35billion to 1.2 million employers, enabling 9.6 million jobs to be furloughed.

Around 780,000 of the furloughed jobs have been in Scotland, a third of the workforce. 

Even as it winds down and more people returning to work, an estimated 217,000 Scottish jobs continue to be supported by the scheme, which is due to close on October 31.

Unions have warned of a tsunami of redundancies if the support is fully withdrawn. 

Official statistics issued morning showed Scotland’s economy shrank by 19.4 per cent over the three months from April to June, and is now 21.1% smaller than in 2019.

Scottish unemployment has also risen from 110,000 to 128,000 over the past year, with the unemployment rate now 4.6% but around 10% for youth unemployment.

Citing the economic data, Mr Sturgeon said ending the furlough scheme next month would lead to a “sharp increase in unemployment” and longer-term economic damage. 

She said: “The economic problems that Covid is causing will not end in a month’s time, so our economic support should not end in a month’s time either.

“Extending the scheme would be in line with the approach of countries like France and Germany and it would be, in my view, in the long term interests of the economy.

“So it is something we will continue to make the case for throughout the next six weeks and I am hopeful that we will see some positive developments in that regard.”

Asked what made her hopeful, she said it was her “natural optimism” but added: “I just look at the situation objectively.

“If I was taking the decision and knew that this decision, if I didn’t change it, was going to lead to lots of avoidable redundancies, I wouldn’t take it. I would try to change that.

“The Chancellor, I think, is an intelligent person who I’m sure doesn’t want to see that happen either, so that is what leads me to hope that we’ll see some shift in the UK Government’s position.”

She added later: “We don’t know if the UK Government is going to extend it. I don’t have the ability to read Rishi Sunak’s mind.

“But  for the reasons I’ve spoken about, the comments he made in the media last night, sound as if there’s reasons for optimism there. I think that would be a good and sensible position to be in.”

SNP economy secretary Fiona Hyslop also told the briefing that the UK Government had a record of changing its mind.

She said: “There have been some overnight indications that the UK Government may look at things, but to date they’ve said it [furlough] will end at the end end of October.

“But of course remember that’s what they also said immediately before the extension from June to October.

“We are hopeful they will listen to the arguments, particularly for those sectors we know will suffer longest in terms of the economy.”