The outlook for both the Scottish and UK economies has improved and looks to remain positive through 2027, according to the Fraser of Allander Institute at the University of Strathclyde.
In its latest quarterly Economic Commentary, the Institute forecasts that the Scottish economy will have ended 2025 with 1.3% growth and will continue to grow by 1.1% in 2026.
This improvement over last quarter’s forecast mirrors similarly upbeat predictions from the Scottish Fiscal Commission (SFC) and the Office for Budget Responsibility (OBR).
At the same time, the number of payrolled employees in Scotland has fallen steadily since mid-2024, with job losses concentrated in hospitality, education, and retail sectors. In recent months, the number of people on unemployment-related benefits has also ticked up.
Professor Mairi Spowage, director of the Institute, said: “Even though we’re seeing growth in the economy, we’ve lost thousands of jobs in hospitality, education, and retail over the course of 2025, and we’re seeing a mismatch between available jobs and the people we have to fill them.
“We know that a lot of people who are not in work are dealing with health conditions, but the jobs that businesses struggle to fill are often physically demanding or in-person, meaning that they may not be suitable for this group of people.”
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