There is a bleak horizon for the economy, but still a glimmer of hope

Despite this, there are some faint glimmers of hope emerging in specific areas, most notably in leisure and culture spending. Yet, with more than one in two individuals cutting back on leisure activities and non-essential spending, these small signs of recovery are tempered by widespread financial concern.

Healthcare and the cost of living continue to dominate people’s concerns.

According to the David Hume Institute’s Understanding Scotland Economy tracker, which collected data early this month, healthcare has emerged as the top priority, with 50 per cent of Scots identifying it as their top concern, up from 46 per cent in the previous wave.

The cost of living also remains at the forefront of people’s minds, with 34 per cent of respondents ranking it as their primary issue. While healthcare and cost of living continue to be the two biggest concerns, the economy has seen a slight uptick in importance as a priority, rising by four percentage points to 20 per cent.

The stark reality of financial distress is reflected in changing consumer behaviour. A significant 53 per cent of Scots are still cutting back on leisure activities, while 52 per cent are reducing non-essential spending.

The impact is disproportionately felt by younger Scots, those in lower social grades, individuals from households with children, and ethnic minorities. These groups are more likely to experience financial stress, and the effects are not limited to their wallets. Mental health, physical health and sleep patterns are also being negatively impacted, highlighting the broader, long-term repercussions of living with financial strain.

In addition to these widespread cutbacks, large reductions in spending on non-essential goods are expected to continue, particularly in areas such as takeaways, deliveries, and dining out in restaurants, where spending cuts of 45 per cent and 43 per cent, respectively, are predicted.

Yet there is some indication of hope on the horizon, perhaps at a least a small glimmer, as certain sectors of the economy may see a small rebound. Notably, spending intentions in areas like clothing and footwear, leisure and culture, and holidays abroad have shown a modest uptick.

In these sectors, the proportion of Scots planning to spend more has increased by five, three and three percentage points respectively. While these increases are modest, they suggest that some segments of the economy could begin to recover, albeit slowly.

However, the road to recovery will not be easy. Any talk by politicians of increasing productivity and economic growth should not ignore the number of people experiencing the impact of financial stress.

As a third of Scots continue to lose sleep over their finances, it is clear that stress and fatigue are taking a toll on the workforce. Attempting to drive growth with a tired and stressed population will prove to be a substantial hurdle for the Scottish economy in the coming year.

While there are small signs of recovery in certain sectors, the overarching trend is still bleak. The connection between the significant number of individuals struggling to make ends meet today and the long-term prosperity of the economy should not be ignored.

- Susan Murray is the director of independent research centre, the David Hume Institute.