finance
Scottish GDP Growth Forecast Revised Upward to 1.0 Percent for 2026
The Fraser of Allander Institute raised its Scottish GDP growth forecast from 0.9 percent to 1.0 percent after stronger-than-expected performance in early 2026. Labour market data showed employment declining and both unemployment and economic inactivity rising in the first quarter.
Jun 25, 7:01 PM·1m read1 source
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The institute's quarterly economic commentary attributed the upward revision to resilience in households and businesses amid ongoing tensions in the Middle East. Inflationary pressures have eased in recent months, though rising energy costs are expected to appear in household gas and electricity bills after the Ofgem price cap increase takes effect in July.
Employment fell in the first quarter of 2026 while unemployment and economic inactivity both increased, according to the commentary. The institute stated that these indicators point to a softening in hiring activity. Institute director Professor Mairi Spowage said the longer disruption continues in the Strait of Hormuz shipping passage, the greater the risk of a more prolonged impact on activity and prices.
"It is encouraging to see the Scottish economy continuing to grow despite a challenging and uncertain global environment," Spowage said. " The commentary concluded that energy markets and the normalisation of activity through the Strait of Hormuz will remain key indicators to watch over the coming months.
