Scottish economic bulletin: June 2025

Economic Outlook

The outlook for Scottish GDP growth has been revised down in line with latest forecasts for the UK as a whole.

• The economic outlook has been notably impacted by the recent developments in global trade tensions and increased economic uncertainty which is expected to weigh on economic activity and sentiment.
• In May the Scottish Fiscal Commission (SFC) forecast Scottish GDP growth to slow to 1.1% in 2025, down from 1.2% in 2024, before rising to 1.8% in 2026 and 1.7% in 2027. This is a more moderate outlook for growth than previously forecast in December, reflecting a similar pattern of downward revisions to UK and global growth forecasts and now is broadly in line with the OBR forecast for the UK.^[17]

• Similarly, the latest HMT average of new independent UK forecasts shows that UK GDP growth is expected to moderate slightly to 1% in 2025 before strengthening to 1.1% in 2026 while inflation is expected to moderate next year following the short term rise during this year.^[18]

• This is set against a challenging backdrop in which the global economy is forecast to slow this year. Most recently in June, the OECD forecast global growth to slow from 3.3% in 2024 to 2.9% in 2025 and 2026.^[19]
• Overall, the downward revisions to the growth outlook reflects the downside risks from the sharp increase in tariffs and trade uncertainty more broadly, alongside the weakness in business and consumer confidence. The risks to the inflation outlook remain two-sided, which together presents a challenging economic landscape to navigate over the coming year.