Scottish economic bulletin: August 2025

Output

The Scottish economy contracted by 0.4% in the three months to May, slowing from stronger growth earlier in the year.

• Scotland's economic output contracted by 0.2% in May and more broadly fell by 0.4% in the three months to May (UK GDP grew 0.5%), with the pace of growth slowing from stronger growth earlier in the year.^[1]
• The recent fall in output means the economy remains at the same level it was in the final quarter of 2024 and has grown 0.2% over the past year.^[2]

• The fall in GDP over the 3-months to May was driven by a 3.1% fall in Production output which offset marginal growth in Services output (0.1%) and 1.1% growth in Construction output.
• Over this period, the fall in Production output accelerated, particularly in the manufacturing sector (-3.1%) and supply of electricity and gas (-6.4%). The fall in manufacturing output was in part impacted by the cessation of oil refining activity at Grangemouth at the end of April. However, not all parts of manufacturing contracted - the manufacturing of transport equipment related to the defence sector had a positive pick-up in growth. On an annual basis, Production output fell 1.9%, its largest annual fall since March 2024.
• In the Services sector, growth strengthened slightly in the 3-months to May, but was marginal overall (0.1%), supported by a pick-up in accommodation and food services output (4.4%) which offset contraction in the financial and insurance sector (-1.3%) and slower 3-monthly growth in professional, scientific and technical services (0.8%) and retail (0.4%). On an annual basis, services grew 0.5%, unchanged from the 3-months to April, having slowed notably from 2024.
• In contrast, growth in Construction sector output strengthened in the 3-months to May to its fastest rate since July last year and has grown 2.4% on an annual basis.