Scottish economic bulletin: February 2026

Consumer Activity

The Scottish Consumer Sentiment Indicator rose by 0.6 points in December, but remains negative at -9.6.

Consumer Sentiment

• The Scottish Consumer Sentiment Indicator (SCSI) reflects how people feel the economy is performing, how secure they feel about their household finances and how relaxed they feel about spending money.
• In December, the consumer sentiment net balance rose over the month to -9.6, strengthening from -10.2 in November, but is 7.5 points lower than in December 2024.^[19]

• The rise in sentiment over the month was driven by improvements in four of the five sub‑indicators covering current economic performance, current and expected household finances, and attitudes to spending. The remaining sub-indicator covering expected economic performance fell over the month to its lowest since July 2025.

• At a UK level, the GfK Consumer Confidence Index rose by 1 point in January to -16 with consumers reporting improved confidence around their personal financial situation however weaker sentiment regarding the general economic situation.^[20]

Spending and Cost of Living

• The slight easing in inflation expectations and the reduction in interest rates are supportive of conditions for stronger consumer and household activity growth, however cost of living challenges and weakness in consumer sentiment continue to weigh on activity and indicates continued caution by households toward spending.
• At a GB level, retail sales contracted in the 3-months to December by -0.3% in volume terms, though rose by 0.3% in value terms. On an annual basis, retail sales strengthened 2.1% in volume terms and 4.0% in value terms.^[21]

• The gradual loosening in monetary policy over the past year is progressively feeding through the economy. The effective interest rate on new mortgages has been on a downward trend and was 4.15% in December while the rate on the stock of existing mortgages has plateaued in recent months at 3.92% following its rising trend since 2022.^[22]

• However, while inflation is forecast to come down from its current rate, consumers continue to face cost pressures. At a GB level, direct debit failure rates due to insufficient funds data show that the failure rate for electricity and gas payments rose to 3.01% in December, up from 2.76% in November, and remains higher than in December 2024 (2.20%). Direct debit failure rates for loans also remain elevated at 4.89% in December, up from 4.29% in December 2024.^[23]
• Failure rates for mortgage payments remain relatively low, however have been rising in recent months with the failure rate at 0.98% in December, marginally up from 0.94% in November and from 0.88% in October.