Press release: Scots brace for tougher economic times
The latest Understanding Scotland Economy Tracker shows Scots’ deep pessimism about tougher economic times ahead.
23rd November 2025
New Understanding Scotland Economy Tracker shows bleak labour market outlook and rising financial strain ahead of UK Budget and Scottish election
Economic pressures continue to weigh heavily on households across Scotland. New data from the Understanding Scotland Economy Tracker reveals pessimism about both current and future financial conditions has grown since August, just as the UK Budget looms and six months remain until the Scottish Parliament election.
Seven in ten Scots (69%) say general economic conditions have worsened over the past year, up three percentage points from the previous wave, while almost half (47%) report their own financial circumstances have deteriorated. Looking ahead, seven in ten Scots (73%) expect the economy to worsen in the next 12 months, and nearly half (47%) anticipate their personal finances will follow suit.
The report, commissioned by The David Hume Institute and produced by the Diffley Partnership, highlights how these concerns are shaping everyday life:
Around half of Scots have cut back on non-essential spending (53%) and leisure activities (51%), unchanged from August.
Nearly half (47%) have reduced heating or energy use, up five percentage points as winter approaches.
Three in ten (28%) report financial stress impacting mental health, while one in four (25%) have lost sleep over money worries.
One in five (22%) have used credit cards when they otherwise wouldn’t, and almost one in five (18%) say financial strain has affected their physical health.
Perception around the labour market outlook is also bleak: seven in ten (70%) Scots do not expect more job opportunities in the next year, and just one in four (24%) believe wages will keep pace with the cost of living. A majority (56%) think they would need to retrain to secure a new job. Meanwhile one in five (22%) report not receiving any employer-provided training beyond their initial induction.
Healthcare (47%) and the cost of living (38%) remain the top public priorities, but immigration continues to climb, with one in five (22%) now citing it as a top issue for Scotland—its highest level since the series began.
Scott Edgar, Senior Research Manager at Diffley Partnership, said:
“This wave of data shows a public bracing for tougher times. Pessimism about the economy and personal finances is deepening, and concerns about job security and skills are widespread. With the UK Budget this week and the Scottish Parliament election just six months away, these findings underline the need for policy responses that address both immediate cost-of-living pressures and longer-term labour market resilience.”
Susan Murray from the David Hume Institute said
“Our latest research paints a picture of many people feeling squeezed from lots of directions. There is a sense that opportunities in the labour market are narrowing, wages won’t keep up with inflation, and a lack of training raises real questions for business owners seeking to boost the productivity of their workforce. With so many people still losing sleep over their finances, we are a long way from improving wellbeing and economic resilience. On Wednesday we will find out if the UK budget will bring some light at the end of the tunnel for those who are struggling.”
ENDS
Notes
Designed by the Diffley Partnership and The David Hume Institute, the survey received 2,245 responses from a representative sample of the adult population, aged 16+, across Scotland. Invitations were issued online using the ScotPulse panel, and fieldwork was conducted between the 1st-4th November 2025. Results are weighted to the Scottish population (2023 estimates) by age and gender.
Blog: Shaking off our misery?
Are Scots beginning to feel more optimistic about the economy? David Gow discusses the latest Understanding Scotland Economy tracker results, are we shaking off the misery?
Blog by David Gow, DHI Trustee
If the public mood in Scotland, as measured by the latest quarterly Understanding Scotland Economy Tracker, is pretty much as bad as it seems, we might as well call off the final five weeks of campaigning in the UK general election and put the politicians out of their misery by voting now.
After all, there are critical and more exciting events coming up like the opener in the Euros 24: Germany v Scotland on June 14 in Edinburgh's twin city Munich.
The latest tracker certainly paints a sombre picture of how we Scots feel. Almost two in three (62% compared with 58% three months ago) believe Scotland is moving in the wrong direction - the highest level since the series began. And less than one in five (19% compared with 23% in February) think it's heading the right way. These are devastating findings for our political class as a whole (which should read the findings and wake up to reality).
The reality is that Scots are worried above all by Healthcare/the NHS - 52% view this as the top issue - and the cost of living (40%) though this latter concern is easing though hardly to the point where "turned the corner" talk is credible. And almost one in five (18%) list trust in politics as the critical issue - a number that's rising.
This does not amount to a conducive environment for a bog-standard campaign centred around "tax and spend" policies (like the one we're having now). Scottish voters are more than disgruntled. Their mood may not (or perhaps even may) amount to despair or rage but they certainly need a dose of hope and optimism. And please don't talk about the constitution - only 7% think it the priority issue.
The overall findings gave plenty of food for thought - and lively discussion - at the latest tracker's presentation in the historic home of RBS on St Andrew Square. It was a lovely late spring morning with sun shining through the upstairs windows and birds carolling us but the discussants were reflective, pondering the state we're in - not the one the politicians are peddling elsewhere.
Introduced by Scott Edgar of the Diffley Partnership, the tracker's results were analysed by Sebastian Burnside, NatWest Chief Economist, and João Sousa, Deputy Director at the Fraser of Allander Institute, with a strong emphasis on cost of living issues, labour market developments and fiscal outcomes and outlooks.
This attendee was struck by several things, notably João's point that the rise in average earnings in Scotland, albeit outpacing inflation now, still remains below the increase in prices - i.e., people do not feel and indeed are not better off than last they were when they went to the polls in 2019. Indeed, this is the first time this has happened. The tracker shows Scottish sentiment in line with this: "...economic pessimism may prove hard to shake despite incremental improvements."
Women, especially those with children, are among the most pessimistic. Even if some of the pessimism has lifted overall only 11% think things generally will improve (be much better or somewhat better) in 12 months' time and, when it comes to personal wellbeing, this rises to just 17%. Still, fewer folk are cutting down on leisure activities to make ends meet or losing sleep over their finances albeit the decline is quite marginal - and three in five Scots are still cutting back on non-essential purchases.
Sebastian intrigued the audience with the bank's internal evidence that its customers are dipping into their savings/deposit accounts when they're forced to make bigger outlays such as repairing the car. Overall, it seems, the struggle to remain on top of the monthly budget is as tough as it can get, notably for lots of younger folk. More than half of Scots (53%) remain dissatisfied with income covering the cost of living.
Campaign mantras such as "change" or "stability" in this context seem beside the point, especially when the fear lurks that the next government will be forced, willy nilly, to raise taxes in order to deal with a worsening UK fiscal position as the IMF and others have warned. It's a frequent message from a weary public when the TV crews conduct 'voxpops' in the pub or coffee shop.
Will the next tracker findings - due in late August or several weeks after the July 4 general election - reveal an uptick in optimism?
Don't hold your breath! It's more than likely that, whatever the outcome, voters will be suspending judgement (as many may do by abstaining and driving turnout down to historic lows) . What they most want is services delivery, not warm promises things can only get better. Are the candidates paying attention on the stump?
Watch the event recording:
Understanding Scotland Economy Tracker - May 2024 Insights
Image credit: sharing thumbnail image by Tadeusz Lakota free from Unsplash 03.06.2024
Blog: People’s priorities laid out for politicians
Catriona Matheson reflects on the latest Understanding Scotland Economy Tracker and what it tells us ahead of the General Election.
Blog by Catriona Matheson, DHI Trustee
As any parent of young children will be able to tell you, a lack of sleep can be hugely detrimental to your wellbeing.
With two very young children at home, I wasn't surprised to learn that more than one in three Scots surveyed about their finances said their mental health had taken a nosedive when their money worries were keeping them awake at night.
The latest Understanding Scotland Economy Tracker recently surveyed Scots about their financial wellbeing. The reading was bleak, though unsurprising in the current economic climate. More than half (54%) of Scots reported that their financial wellbeing is worse than 12 months ago, and this was higher among women (57%) than men (50%). In addition to losing sleep and poor mental health, significant numbers reported a negative impact on home relationships (22%), a detrimental impact on physical health (16%) or feeling less effective at work (13%).
Only one in three (34%) of respondents expressed contentment with their income levels and their ability to cover the cost of living, down from 37% previously. This decline is particularly pronounced in the ability of Scots to meet household bills, reflecting the difficulties faced by families and individuals across the country as they continue to navigate increased costs against stagnant incomes.
Interestingly, despite these figures the cost of living was prioristed second (40%) to healthcare (52%) as top issues facing Scotland. This means Scotland's political parties should focus on the NHS as much as economic recovery when speaking to the electorate over the course of the General Election campaign.
While the survey presented nuanced attitudes, a prevailing sentiment was clear: there is unease with Scotland's trajectory. A striking 62% of Scots think things in Scotland are going in the wrong direction which marks a notable surge from 58% in February 2023, and is the highest ever recorded in the Understanding Scotland series. Conversely, the proportion believing that Scotland is headed in the right direction has dwindled to 19%, the lowest the David Hume Institute has ever recorded. This unhappiness among Scots regarding the direction of the nation presents a steep challenge for political leaders. Not only does Scotland's economic prospects need to improve but Scots will need to feel the benefit before they have confidence in the country's leadership.
Survey fieldwork took place in early May when First Minister Humza Yousaf announced his resignation, and there was still uncertainty over his successor. At a UK level, an election was on the horizon but the timings were unconfirmed.
A few short weeks later, we now have John Swinney in Bute House and an imminent General Election with Labour poised to enter Number 10. The new First Minister has put economic growth at the heart of his plans for the Scottish Government, and Keir Starmer has already hit the campaign trail talking of "rebuilding Britain."
Whether our new First Minister and the next Prime Minister can turn the ship around remains to be seen, and whether Scots will start to see any benefit in their bank balance is even more uncertain. In the meantime, political leaders would do well to focus on the NHS and the cost of living crisis as they pound the pavements over the next few weeks. And let's hope, for the sake of getting a good night's sleep, the economy significantly picks up before too long.
Further reading: