Scottish economic bulletin: February 2025

The February 2025 Scottish Economic Bulletin reports a slowdown in growth, with rising uncertainty impacting business and consumer sentiment. The economy contracted by 0.3% in the three months to November, driven by a sharp 3.5% fall in Production output, despite modest growth in Services and Construction.

While 2024 saw stronger overall growth (1.2%) than 2023, the labour market has shown signs of softening. Unemployment fell to 3.8%, but payrolled employment and hiring intentions have dipped. Earnings growth has eased to 2.1% in real terms as inflation fell to 2.5%. Business optimism has weakened due to demand and tax concerns.

Consumer sentiment turned negative in late 2024 but improved in December. Economic growth is expected to pick up in 2025, supported by fiscal stimulus and past rate cuts. However, risks remain from tax and wage changes, US trade policy shifts, and fiscal pressures from higher bond yields.

You can read the full document here.