The Scottish economy growth forecast has been upgraded, so why all the gloom? Business Editor Ian McConnell addresses this big question.

You might think that an upgrade to Scotland’s growth forecast for this year - unveiled today by a leading research institute - might be accompanied by an upbeat narrative.

However, it is not.

The University of Strathclyde’s Fraser of Allander Institute, even while raising its growth forecast for the Scottish economy this year from the 0.8% it predicted in June to 1%, highlights pessimism among businesses about the outlook.

It also flags difficulties for policymaking created by issues with official labour market statistics. And Fraser of Allander appears at pains to ensure people are not tempted to get carried away on a wave of optimism on the back of the upgrade to its growth forecast for Scotland for this year.

In its latest quarterly economic commentary, published today, the research institute says: “While our 2025 forecast has been uprated from 0.8% to 1.0%, this is nothing to write home about. Weak growth at the beginning of 2024 means our economic outlook is comparatively better than the previous year, but we have seen contractions in several areas.”

In particular, Fraser of Allander flags contractions in Scottish manufacturing.

The research institute says: “The FAI forecast for 2025 has been........

© Herald Scotland