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Publication - Research and analysis

Scottish economic bulletin: January 2026

Published
16 January 2026
From
Chief Economist
Directorate
Chief Economist Directorate
Topic
Economy
ISBN
9781806436842

Provides a summary of latest key economic statistics, forecasts and analysis on the Scottish economy.

Part of

View supporting documents Supporting documents

Economic Outlook

The Scottish economy is forecast to strengthen in 2026 as global uncertainty remains elevated.

  • The Scottish Fiscal Commission (SFC) published their latest forecasts for the Scottish economy alongside the Scottish Budget on 13 January. Following expected growth of 1.1% in 2025 the SFC forecast Scottish GDP growth to strengthen to 1.3% in both 2026 and 2027.
  • This presents a downgrade to the growth outlook from the SFC’s May 2025 forecast of c.0.5 percentage points in 2026 and 2027 reflecting a downgrade to the productivity outlook in line with that of the OBR. The growth forecast remains slightly stronger than the forecast from the Fraser of Allander Institute in October which forecast growth of 1.0% in 2026 and 1.1% in 2027. [27],[28]
Bar chart showing that following expected growth of 1.1% in 2025, Scotland’s GDP growth is forecast to strengthen to 1.3% in 2026 and 2027.
  • At a UK level, the Office for Budget Responsibility (OBR) forecast UK GDP growth to pick up to 1.5% in 2025 before slowing to 1.4% in 2026 and stabilising at 1.5% from 2027. This a reduction in growth from their March forecast, reflecting a downgrade in their productivity outlook. More broadly, the latest HMT average of new independent UK forecasts from December showed that UK GDP growth is projected to strengthen to 1.4% in 2025 before slowing to 1.1% in 2026.[29]
Bar chart showing UK GDP growth is forecast to slow slightly to 1.1% in 2026 while the annual inflation rate is forecast to fall to 2.2% in Q4 2026.
  • UK inflation is currently on a downward trajectory from its recent peak in the third quarter of 2025 and in the short term is expected to fall closer to its 2% target rate in the second quarter of this year. There remains risks in both directions however, on how sustainably inflation will remain around target in the medium term. The HMT average of independent UK forecasts project inflation to have averaged 3.5% in 2025 and to average 2.2% in 2026.
  • At a global level, the OECD project global GDP growth to have slowed to 3.2% in 2025 (from 3.3% in 2024) and is expected to slow further in 2026 to 2.9% as earlier activity unwinds and the impacts of higher effective tariffs continue to feed through. Growth is then projected to edge up in 2027 to 3.1%. Easing inflationary pressures and improving financial conditions are expected to be supportive of growth, however risks to the global outlook remain from elevated geopolitical uncertainty.[30]

Contact

Email: economic.statistics@gov.scot

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