The UK’s economy shrank unexpectedly by 0.1% in October, according to the latest official figures.
Economists had been expecting it to grow by the same margin. Over the three months to the end of October the economy also shrank by 0.1%, as manufacturing output fell and services growth stalled, the Office for National Statistics said.
The data was released as the CBI upgraded its UK growth forecast for 2026 to 1.3% from 1%, largely on the back of the temporary boost to government spending announced in the budget.
However, it says businesses are “swimming against the powerful tides of weak demand, elevated labour and energy costs, and ongoing domestic and global uncertainty”.
The CBI expects inflation to ease to 2.6% next year and 2.3% in 2027 and the unemployment rate to hover around 5%. Two further cuts to interest rates are expected, the first next week and a second early next year, taking the base rate to 3.5%.
Meanwhile, retail data from the retail trade points to a disappointing November, despite the Black Friday sales, though some retailers enjoyed a solid month.
Total sales in Scotland increased by 0.1% compared with November 2024, but adjusted for inflation, there was a year-on-year decrease of 0.5%.
Ewan MacDonald-Russell, deputy head of the Scottish Retail Consortium, said: “Scottish retail hopes of a strong end to 2025 are hanging by a thread after disappointing November retail sales.
“Retailers are now on tenterhooks for a last-minute surge in Christmas sales to round off what will otherwise be a humdrum year.
“However, if sales don’t materialise then retailers last hope will be the Scottish Government’s Budget in January.
“If the finance secretary doesn’t deliver a business rates model which is at least as competitive as the new lower rates in England, then it will be a long winter for retailers.”
Linda Ellett, UK head of consumer, retail & leisure, KPMG, said: “Scotland’s retailers will be disappointed that Black Friday period promotions failed to deliver the boost that they were hoping for, with household costs and nervousness about the economy continuing to impact discretionary buying.”
Contradicting the weak Scotland-wide trade data, the country’s largest outlet shopping destination recorded its best ever November performance.
Sales at Livingston Designer Outlet grew by 7.5% year on year, supported by a 4% increase in footfall.
It says performance was boosted during the Black Friday trading period, where sales were up 13.3% and like-for-like sales grew by 11.5%.
The centre added a number of brands since last year such as Belstaff, Columbia, Monsoon and Ravensburger which may have influenced the data.
LDC says these brands elevate the centre’s profile, driving footfall. Calvin Klein, which recently upsized, saw sales climb by 44% in November.
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