Scottish economy doomsayers may have got big surprise

Given the doomsaying that seems to be an inevitable feature of too many discussions about how Scotland is doing, there was probably a big surprise for some last week.

This surprise came in the form of something at odds with what at times seems like a relentlessly downbeat narrative on Scotland, often emanating from the more ideologically inclined.

Figures published by the Scottish Government last Wednesday showed the economy north of the Border outperformed that in the UK as a whole last year.

Over 2025, Scotland’s gross domestic product rose by 1.4%. UK GDP increased by 1.3% last year, according to data published by the Office for National Statistics in February.

The Scottish Government data showed a 0.1% quarter-on-quarter rise in GDP north of the Border in the final three months of last year.

And the Scottish economy grew in every quarter last year, a fact highlighted by Deputy First Minister Kate Forbes.

It is obviously important to realise that 1.4% growth, while a very good outturn given the difficult UK economic backdrop, is far from spectacular. And of course the margin of Scotland’s outperformance of the UK as a whole is fine.

That said, Scotland growing faster than the UK last year is thankfully entirely at odds with that downbeat narrative you hear so often north of the Border, usually from people who it seems would never let the hard numbers get in the way of their politically motivated view of the economy.

Sometimes this seems to be driven by a dislike of Scotland’s relatively larger public sector. At other times, it may be motivated by a firm view on the independence question and an unwillingness to put this aside to consider the actual numbers.

Or it might be fuelled by Scotland’s relatively greater income tax burden for higher earners, compared with other parts of the UK. It should be noted for context that First Minister John Swinney and Ms Forbes signalled fairly soon after they took up their current posts in May 2024 that there would be no further divergence on this front during the lifetime of the current Scottish Parliament.

Comparing the fourth quarter of 2025 with the final three months of 2024, Scottish GDP was up by 1.2% and UK GDP rose by 1%. So also an outperformance on this timeframe.

The Scottish Government figures show that, comparing last year with 2024, Scotland’s services sector grew by 2%, with production output falling by 1.7%. Over the same timeframe, the Scottish construction sector grew by 1.3%, and agriculture, forestry and fishing output contracted by 1%.

Ms Forbes said of the latest Scottish GDP data: “These figures are encouraging. Scotland's economy grew in every quarter of 2025, with growth of 1.4% over the year.”

“Encouraging” certainly seems like a fair enough characterisation of the performance of the Scottish economy last year.

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And, while Scotland’s outperformance of the UK as a whole in the economic growth stakes might trigger a baffled or annoyed demeanour for some doomsayers, those who have taken on board the good news as well as being aware of various challenges would not have been surprised.

For example, Scotland has continued to shine on the foreign direct investment front.

As she welcomed the nation’s latest GDP figures last week, Ms Forbes also highlighted a “milestone” reached by the Scottish National Investment Bank.

SNIB had revealed last Tuesday that the total amount of capital it had committed in Scottish businesses and projects had risen to more than £1 billion, with a £10 million investment in Inverness-based Aurora Energy Services.

And it declared: “The bank, which marked its fifth anniversary in November of last year, was established to invest in businesses and projects that support the development of a fairer, more sustainable Scottish economy. The Scottish Government committed to capitalising the bank with £2bn over a 10-year period. To date, more than £1.7bn has been invested alongside the bank’s capital from private and public investors.”

Ms Forbes said last Wednesday: "The Scottish Government has a strong record of investing in businesses through programmes like the Scottish National Investment Bank, which reached £1 billion in committed investment this week, and our enterprise agencies.

"Our Techscaler initiative, which helps tech start-ups to scale and grow, and our small business bonus scheme - the most generous of its kind in the UK - show our commitment to a thriving economy.”

The performance of Scotland’s economy will no doubt continue to be sharply in focus in the run-up to the Holyrood election in May.

Meanwhile, the UK economy will be in the spotlight on Tuesday when Chancellor Rachel Reeves delivers what she is calling her “Spring Forecast”.

While Ms Reeves has made it plain that Labour will stick to its promise of one major fiscal event a year in the form of the Budget, which surely makes good sense given the turbulence caused by having so many Budgets over recent years, there will still be plenty to analyse on Tuesday.

The Chancellor’s speech to the House of Commons will be accompanied by the latest UK economic forecasts from the Office for Budget Responsibility, which are likely to provide further sobering reading for anyone feeling euphoric about the outlook.

And it will of course be very interesting to hear what Ms Reeves has to say about the current state of affairs.