This represents a concerning slowdown in the Scottish economy, particularly as the UK as a whole saw growth of 0.2% in August.

In the three months to August, GDP is estimated to have grown by 0.1% compared to the previous three month period. This indicates a fall in quarterly growth after the growth of 0.4% (revised from 0.6%) in 2024 Quarter 2 (April to June).

The industry which made the biggest contribution to overall contraction in GDP in August was Information & Communications, which contracted by 3.2%, contributing -0.2 percentage points to the August headline figure of -0.3%. The Professional, Scientific and Technical Services sector contributed ‑0.1 percentage points to overall contraction in GDP.

In August, output in the Education sector and Electricity and Gas Supply is estimated to each have contributed 0.1 percentage points to headline GDP.

Kevin Brown, savings specialist at Scottish Friendly, commented: “Scottish GDP has worryingly gone into retreat ahead of the UK Budget, contracting by 0.3% in August while the UK overall saw growth of 0.2%. This is a concerning development just ahead of what is set to be a significant UK Budget announcement from Westminster.

“It is unlikely there will be huge news for Scots in today’s Budget, particularly as several key areas of taxation are devolved. But the wider implications for investment and other areas which affect all four nations will be closely watched north of the border.”

Mr Brown continued: “So far Scottish GDP has more or less kept pace with the rest of the UK this year, but if it starts to show significant signs of trailing then other indicators such as employment could start to weaken. This will be a big concern for households still trying to make ends meet after a heavy bout of inflation.

“The one kernel of good news in all this is that interest rates look set to come down in earnest in the next few months, easing pressure of households and businesses with debt such as mortgages. However, savers won’t cheer falling rates and should start to look for homes other than cash for their hard-earned nest eggs.”