It is an island known for holding a little bit of Scotland in every corner.

But now, the Isle of Arran needs the country's support to recover from "long-term scarring" of the coronavirus pandemic, according to a new report.

The full scale of the economic impact of Covid-19 on the famous Scots island has been revealed in an independent report by the Fraser of Allander Institute, commissioned by North Ayrshire Council.

The loss of visitors throughout the pandemic and a reduced ferry capacity to the island could have “long-term scarring effects in the local labour market”, the report warns.

READ MORE: Business owners on Isle of Arran say 'we're ready' to welcome back tourists

A large number of businesses in Arran depend upon "social spending" and the report states its tourism industry has been disproportionately impacted by lockdown measures and subsequent capacity constraints in restaurants, bars and cafes.

With a third of Arran's economy reliant on the tourism and hospitality sector, fears are mounting over the island's recovery from the pandemic.

Councillor Alex Gallagher, cabinet member for post-Covid-renewal and the islands at North Ayrshire Council, said the report is a wake-up call.

“Nowhere has escaped the economic impact of Covid-19 but some areas have felt it far more sharply than others – areas such as Arran,” said Councillor Gallagher.

“The report highlights that Arran’s labour market has been more severely affected than surrounding areas and Scotland as a whole.

“Beyond this, the finding that each day of ferry operation contributes £170,000 to the island’s economy shows the economic and social lifeline the ferry provides to Arran.

“Even as restrictions have eased, the report shows Arran is still struggling to recover and that there will be longer-term impacts on Arran’s businesses and communities. It is vital that Governments provide further support for islands given the unique challenges they face.

“The Council launched its own Economic Recovery and Renewal Approach earlier this month to build back better, fairer and greener through Community Wealth Building and we are committed to supporting our islands to recover. However, it is clear that national intervention and support is required to support island economies at this difficult time.”

The report highlighted the importance of the ferry, showing that each day of operation contributes £170,000 to the island's economy.

READ MORE: Letters: Face up to the ferries reality

In 2018, Arran's Gross Value Added (GVA), which is the measure of the value of goods and services produced on the island, was estimated to be over £77m.

In the first half this year, GVA has fallen by 33 per cent, owing to the falling number of passengers using the ferry service.

Mairi Spowage, Deputy Director of the Fraser of Allander Institute, said: “Arran is a unique part of North Ayrshire and is a strong island economy in Scotland. The current economic outlook for Arran is dominated by the impact of Covid-19. Like the rest of Scotland, challenging times lie ahead for our islands, both in the short and long term.

“Arran’s dominant hospitality sector has made it particularly exposed to the initial lockdown restrictions and the ensuing capacity and social distancing regulations as the economy began to open back up.

“Like most island economies Arran is constrained by its infrastructure and is reliant on its ferries, the primary mode of transport to and from Arran, for transport commuters and tourists. The Arran economy is highly sensitive to the route map out of this crisis and the following economic recovery plan.

“National policy must recognise the unique challenges that island economies are facing in the months and years ahead as we recover from this economic crisis.”

Linda Johnstone, co-founder and managing director of Auchrannie Resort, one of the major tourist destinations on Arran, said: “We are delighted that North Ayrshire Council have commissioned this important research from the Fraser of Allander Institute which focuses on the impact of Covid-19 on the Arran economy.  

“For the island to recover successfully, it is absolutely essential that individuals on and off the island understand the unique issues which affect us, and this will be pivotal in ensuring the island receives the support it needs.”