Scottish Economic Bulletin: November 2026

Economic Outlook

Elevated energy prices are expected to push inflation to around 5% by the middle of 2027.

• The economic outlook has become more challenging in recent months. Persistently elevated energy prices, driven by the prolonged conflict in the Middle East, have contributed to a reassessment of both inflation and interest rate expectations. While economic activity has remained relatively resilient, higher borrowing costs and continued cost pressures are expected to weigh on growth prospects over the period ahead.
• At a global level, the latest International Monetary Fund (IMF) forecasts suggest the world economy has remained resilient despite ongoing geopolitical tensions and higher energy prices. Global GDP growth is projected at 3.1% in 2026 (unchanged from the April forecast) and 3.4% in 2027 (revised up from 3.3%), while global headline inflation is forecast to rise to 4.7% in 2026 before easing to 4.1% in 2027. However, risks to the outlook remain tilted to the downside, including from further geopolitical disruption, commodity price volatility and a potential tightening in global financial conditions.^[22]
• At a UK level, the latest Office for Budget Responsibility (OBR) forecasts project GDP growth of 1.2% in 2026 (revised up from 1.1%), 1.0% in 2027 (revised down from 1.5%) and 1.6% in 2028 (unchanged). Higher energy prices and interest rates are expected to weigh on activity in the near term before growth strengthens from 2028 onwards. The Bank of England's central projection presents a broadly similar outlook, with GDP growth slowing from 1.6% in 2026 to 1.3% in 2027 and 1.2% in 2028. The latest HM Treasury survey of independent forecasts also points to relatively modest growth, with average forecasts of 1.3% in 2026 and 1.2% in 2027. The next Scottish Fiscal Commission forecasts will be published alongside the Scottish Budget on 3 December.^{[23],[24],[25]}



• UK inflation is expected to rise significantly over the coming year. The Bank of England's November Report revised up its inflation outlook, reflecting further increases in energy prices since July, stronger-than-expected economic activity and a heightened risk of second-round effects on wages and prices. CPI inflation is projected to rise to 3.8% in Q4 2026 and peak at around 5% by the middle of 2027, before gradually returning towards the 2% target over the medium term.^[26]



• Overall, the balance of risks remains skewed towards slower growth and higher inflation than anticipated earlier in the year. Although the UK economy has continued to show resilience, persistent energy price pressures, tighter financial conditions and ongoing geopolitical uncertainty are expected to weigh on activity and prolong the path back to price stability.
• The Scottish Fiscal Commission will set out its economic forecasts for Scotland for alongside the Scottish budget on 3^rd December 2026.