Exclusive:UK Budget: Nearly three quarters of Scots expect economy to get worse in next year

The Understanding Scotland Economy Tracker showed 73 per cent of Scots expect the country’s financial situation to deteriorate in the next year.

Some 69 per cent said it has got worse over the past year, with 47 per cent saying their own financial circumstances had deteriorated.

The report was commissioned by the David Hume Institute and produced by the Diffley Partnership. A total of 2,245 adults aged 16 or over in Scotland were surveyed online between November 1-4.

The results have been published ahead of the UK Budget on Wednesday and with the Scottish Parliament election only six months away.

The report also showed half of Scots have cut back on non-essential spending (53 per cent) and leisure activities (51 per cent), while nearly half (47 per cent) have reduced heating or energy use.

Some 28 per cent said financial stress was impacting mental health, while 25 per cent have lost sleep over money worries.

At the same time, 22 per cent have used credit cards when they otherwise wouldn’t have, and 18 per cent say financial strain has affected their physical health.

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 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 every direction. 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 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 any light at the end of the tunnel or just more darkness for those struggling every day.”

Perception around the labour market outlook is also bleak. Some 70 per cent of Scots do not expect more job opportunities in the next year.

Just 24 per cent believe wages will keep pace with inflation. Some 56 per cent think they would need to retrain to secure a new job. Meanwhile 22 per cent report not receiving any employer-provided training beyond their initial induction.

Healthcare (47 per cent) and the cost of living (38 per cent) remain the top public priorities, but immigration continues to climb, with 22 per cent now citing it as a top issue for Scotland — its highest level since the series began.

Colin Borland, Scotland director at the Federation of Small Businesses, said: “These figures should come as no surprise to anyone. The economic mood music in the last year or so has been, if not funereal, certainly in a minor key. And this lack of public optimism is reflected – as you would expect – in small business sentiment.

“A quick glance at the latest Federation of Small Businesses’ Small Business Index for Scotland shows the headline measure of confidence at one of its lowest levels ever, and down sharply on the previous quarter.

“Fifty seven per cent of Scotland’s small businesses saw revenues drop in the last quarter. With nine in ten also reporting a rise in costs over the same period, you don’t need to be a Harvard MBA graduate to work out that this is squeezing profits, and the life, out of businesses. Worryingly, just 6 per cent of Scotland’s small firms expect to grow in the next 12 months. That’s down from almost a quarter three months ago.

“That’s why all eyes will be on the Chancellor’s Budget statement on Wednesday. We need bold action to ease costs and boost economic activity – from raising the VAT threshold to shielding more smaller employers from recent National Insurance rises by increasing the Employment Allowance.”

SNP MSP Kenneth Gibson said: “It’s no surprise that people in Scotland feel let down by a Westminster system which has squandered every opportunity to make their lives better. The UK economy has lurched from crisis to crisis since 2008, and neither Labour nor the Tories had the vision or ambition to invest in measures which improve living standards for ordinary people.

"Last week we saw the devastating impact of the Chancellor's reckless decision to hike National Insurance contributions, with UK unemployment rising to its highest level in nearly five years to over 5 per cent. In Scotland, it is welcome that unemployment is lower at 3.7 per cent and falling, with the SNP Government working hard with businesses to attract jobs and investment.

"However, with the UK government still holding most of the powers to grow our economy, it is clear that Scotland needs the fresh start of independence to escape constant Westminster economic chaos."

Scottish Labour finance spokesperson Michael Marra said: “Economic growth needs to be central to the aims of the next Scottish Government. For too long, the SNP Government has neglected the need for effective Scottish economic policy.

“The UK Labour government has delivered a step change when it comes to economic policy and their growth mission means there is a laser-focus on delivering growth.”

Scottish Conservative shadow finance and local government secretary Craig Hoy said: “Its little wonder people feel worse off when they’re being clobbered with tax hikes by two left-wing governments, one in Holyrood and one in Westminster.

“Despite paying the highest taxes anywhere in the UK, Scots can see our NHS is in permanent crisis, school standards are plummeting and our roads crumbling. Neither Labour nor the SNP have the will to tackle the unsustainable welfare bill and their only answer is to constantly hike taxes to pay for it.”

“From cutting energy bills by £90 a year to boosting high streets with a 5p VAT cut for hospitality, my party has a realistic plan to deliver change with fairness at its heart.”

Scottish Liberal Democrat economy spokesperson Jamie Greene MSP said: “People are finding it extremely tough to make ends meet, and these findings show just how much the status quo has let them down.”