Economic Commentary – February 2025

The Economic Commentary provides a regular update on global, UK and Scottish economic trends, drawing on recent economic data as well as feedback from businesses.

The methodology consisted of desk research.

• Business activity rose across all major economies in January, but only marginally in the UK and eurozone. Services growth softened across the eurozone, US, UK and China.
• The IMF is forecasting 3.3% global growth in 2025, up from 3.2% in 2024. Emerging economies are expected to grow much faster than advanced, with country divergences widening.
• The UK economy returned to modest growth in the last quarter of 2024 (+0.1%) after remaining flat in Q3.
• Business activity rose in only four UK regions and nations in January, with Scotland among those that contracted as an
  uplift in services activity was offset by a decline in manufacturing.
• Headline UK consumer price inflation rose to a 10-month high of 3.0% in January, up from 2.5% in December, and remaining above the Bank of England’s target of 2%.
• The Scottish economy contracted in November by 0.5%, following a fall of 0.4% on October.
• More businesses in Scotland reported falling monthly turnover than rising for the fourth month in a row in December.
• January data shows signs of a cooling labour market as businesses report shedding jobs, and the number of payrolled employees decreased by 2,000 (-0.1%) over the year. Despite this, 24% of businesses continue to report worker shortages.
• Scottish Enterprise customers are generally less optimistic than they were this time last year; they are more reluctant make significant investments. The main challenges continue to be finding staff, skills and rising costs.
• The Scottish Fiscal Commission is forecasting 1.5% GDP growth in 2025, up from 1.0% in 2024 as an increase in public spending in Scotland, following the UK fiscal expansion announced in the UK Autumn budget, is expected to boost GDP growth.

The paper makes no recommendations.