Economic Commentary October 2025

Our 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.

• Global business activity further expanded in September, with the service sector outperforming manufacturing.
• UK GDP grew by 0.1% in August, following a contraction of 0.1% in July. Output expanded in production, while services showed no growth and construction fell.
• Business activity rose in just 3 of 12 UK nations/regions in September with most areas recording lower levels of new business as well as continuing cost pressures.
• UK consumer price inflation was 3.8% in the year to September, unchanged from August and still above the Bank of England’s 2% target.
• The Scottish economy contracted by 0.3% in July following growth of 0.7% in June. Over the month, output was down in production but up in services and construction.
• Scotland’s labour market continues to cool as the number of payrolled employees decreased for the tenth consecutive month.
• The top business concerns for Scottish businesses are falling demand and UK competition. Looking ahead, nearly a third have concerns about their supply chains.
• More Scottish businesses continue to report a fall in new capital investment. Uncertainty about demand and a shortage of internal finance are the main factors holding back investment.
• Overall, Scottish Enterprise customers are reporting lower levels of business sentiment, with economic uncertainty, financial pressures and difficulty accessing finance key causes.
• The Fraser of Allander Institute forecasts Scottish growth of 1.0% in both 2025 and 2026. 

The paper makes no recommendations.