Scottish Fiscal Commission

‘Capital’ spending is investment in public infrastructure like roads, schools and hospitals. We explain why this is important for the economy and public services, and the outlook for capital spending in our new Insight. Read it here: bit.ly/4u6k861

🔊One week today we will be hosting our webinar on what Scotland's finances mean for the next parliament

Join us by registering here: www.eventbrite.co.uk/e/public-web...

📢 We look forward to giving evidence to the Finance and Public Administration Committee tomorrow at 09:30am

Watch live via the Scottish Parliament website: www.scottishparliament.tv

Thank you to everyone who joined us at our in person event today — great discussion & questions.

Next up: our public webinar on 11th March - What Scotland’s finances mean for the next parliament.

🎟️ Book your place here: bit.ly/3P4M9uk

🎉 Join us in person tomorrow!

Spaces are filling up but there’s still time to book for our Fiscal Sustainability Perspectives event — What Scotland’s finances mean for the next parliament. 💼📊🏛️

Register now: bit.ly/4c3nsbv

Bar chart titled “Living standards, real disposable income per person, per cent growth”, showing that Scottish living standards are forecast to grow by less than 1% over the next five years. Historical averages show growth of around 3% per year between 1999–2000 and 2007–08, and around 0.8% between 2008–09 and 2024–25. Growth in 2025–26 is close to zero. Dashed bars show the January 2026 forecast, with annual growth gradually increasing but remaining below 1%, reaching around 0.7% by 2030–31.

The next parliament will follow on from 17 years of relatively weak growth in living standards and an outlook where living standards are only expected to improve slowly over the next parliamentary term.
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Stacked area chart titled “Devolved public sector workforce (full-time equivalent)”, showing that the devolved public sector workforce in Scotland has generally increased since 1999–2000 and has been on an upward trajectory since the COVID-19 pandemic. Total employment rises from around 380,000 in 1999–2000 to about 470,000 in 2024–25. The chart breaks the public sector workforce down into three groups: NHS Scotland, the wider Scottish Government workforce, and local government, with local government being the largest component throughout. A vertical dotted line in 2013–14 indicates police and fire centralisation. NHS Scotland employment increases steadily over the period, while the wider Scottish Government workforce and local government show fluctuations but also rise overall after 2020.

Paying for the devolved public sector workforce takes up over half of day-to-day spending. The workforce has grown since the pandemic but the Scottish Government now wants to manage its pay costs and reduce its workforce. This would reverse recent trends.
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Bar chart titled “Spending in this parliament: Social security spending has grown the most over this parliament”, showing percentage changes in Scottish Government spending between 2022–23 and 2025–26. Social protection (covering social security benefits) has increased the most, by around 35%. Smaller increases are shown for “Others” (about 7%) and Health (about 6%). Education and General public services show little or no change. Transport and Public order and safety show small decreases. Economic affairs shows the largest decrease, at around minus 10%.

There have been large increases in social security spending over this parliament, more than in any other part of the Scottish Budget. Based on current policies, we forecast social security spending will continue to increase. (2/4)

The words “We have published our report on what Scotland’s finances mean for the next parliament” alongside the cover page for our publication.

We have published our Fiscal Sustainability Perspectives report exploring what Scotland’s finances mean for the next parliament. Read it here: bit.ly/3MsZlZr
A quick thread on some of the headline messages below 🧵 (1/4)

The words “Tomorrow we will publish our report on what Scotland’s finances mean for the next parliament” alongside a picture of a calendar showing Wednesday 25 February.

Tomorrow at 9:30am we publish our Fiscal Sustainability Perspectives report exploring what Scotland’s finances mean for the next parliament. Follow us on social media to see our key charts and register for our in person event on Thursday 26 February here: bit.ly/4c3nsbv

Line chart showing the percentage share of all Scottish and UK income taxpayers paying higher rate tax or above over time. In 2016-17, the UK starts higher at about 15%, while Scotland begins at around 12%. Over the next few years the trends shift, with Scotland’s rate rising and overtaking the UK around 2019-20. Scotland's rate then increases more quickly after 2021-22, reaching about 20% by 2023–24 and set to continue rising to around 30% by 2030–31. The rest of the UK is projected to grow more slowly, reaching about 24% by 2030-31, so the gap widens over time with Scotland higher in later years.

Last week the Scottish Parliament agreed rates and bands for Scottish income tax in 2026-27 ahead of tomorrow’s final Budget Bill vote. Our Insight explains how the Scottish tax system differs to the rest of UK and raises extra funding for the Scottish Budget. Read it here: bit.ly/3MpeaMA

Today we published a supplementary costing for Non-Domestic Rates. You can read it here: bit.ly/4kMSV3I

One week today! 🎉 Join us in person for our upcoming Fiscal Sustainability Perspectives report event — What Scotland’s finances mean for the next parliament. 💼📊🏛️
Register here: bit.ly/4c3nsbv

The words “In a week’s time, we will publish our report on what Scotland’s finances mean for the next parliament” alongside a picture of a calendar showing Wednesday 25 February.

We’ll publish our Fiscal Sustainability Perspectives report exploring what Scotland’s finances mean for the next parliament on Wednesday 25 February. Follow us on social media to see our key charts and register for our in person event on 26 February here: bit.ly/4c3nsbv

Bar chart titled “Percentage share of day-to-day spending by portfolio,” comparing four portfolios across three years (2026–27, 2027–28, 2028–29). Health and Social Care has the largest share, rising slightly from about 38% to 40%. Local Government (including NDR) is the second largest but gradually declines from around 26% to 25%. Social Justice increases slightly from about 14% to 15%. Other portfolios combined remain stable at around 20% across the period.

Today, the Finance and Public Administration Committee considers the 2026-27 Budget Bill at stage 2. But what about spending beyond next year? This Insight considers the medium-term day-to-day spending priorities set out in the Scottish Government's Spending Review. Read it here: bit.ly/4rmB9qN

This afternoon, @scotparl.bsky.social considers the 26-27 Budget Bill in its Stage 1 debate. An emerging issue is how comparisons to the Government’s spending plans in previous years are made. This Insight considers the issue fiscalcommission.scot/12-february-...

📅 3 weeks today! 🎉

Join us in person for our upcoming Fiscal Sustainability Perspectives report event — What Scotland’s finances mean for the next parliament. 💼📊🏛️

👉 Register here: www.eventbrite.co.uk/e/what-scotl...
🔗✨

Come along to our upcoming in person event exploring "What Scotland’s finances mean for the next parliament" 💬📊

👉Register now to secure your place: www.eventbrite.co.uk/e/what-scotl...

Today we sent our response to the Scottish Government Climate Change Plan Consultation. This insight summarises our response. Read it here fiscalcommission.scot/28-january-2...

Tomorrow we send our response to the Scottish Government’s Climate Change Plan Consultation. This Insight sets out how climate change impacts fiscal matters in Scotland: fiscalcommission.scot/27-january-2...

Scottish Economic and Fiscal Forecasts - January 2026 YouTube video by Scottish Fiscal Commission

🔉Our webinar is taking place now - use this link to watch along: www.youtube.com/live/v23bs8V...

The words “Register for our public webinar on Scotland’s latest economic and fiscal forecasts” alongside a picture of a calendar showing Wednesday 21 January.

You’re invited to a public webinar on our latest forecasts on Wednesday 21 January at 11:00 to 12:00. You can register for this online event here: bit.ly/4bmIMYR

Listen to our commissioner Justine Riccomini talk about the changes to our forecasts and funding of the Scottish Government below:

Listen to our Chair Professor Graeme Roy talk about of the Scottish Government spending review and Budget Process below:

Listen to our commissioner Dr Eleanor Ryan talk about the overall funding position of the Scottish Government below:

Line chart illustrating the effect of social security spending on the Scottish Budget across three fiscal events: December 2024, June 2025, and January 2026. The most significant change occurred between June 2025 and January 2026, narrowing by £0.8 billion in 202930.

Since June 2025, the effect of social security on the Budget has narrowed by £0.8 billion in 2029-30, driven by £0.5 billion from the UK Government reversing plans for PIP, increasing funding, and £0.15 billion from removing the Two-Child Limit Payment from Scottish spending. (10/10)

Column chart showing outturn social security spending in 2024-25 and forecast spending over 2025-26 to 2030-31. Spending was £6.1 billion in 2024-25, of which £1.0 billion was in excess of the BGA funding. Total spending rises to £7.4 billion in 2026-27 and £9.2 billion 2030–31.

Social security spending is forecast to increase from £7.4 bn in 2026-27 to £9.2 bn in 2030-31, driven by uprating of payments and rising caseloads. Spending exceeds Block Grant Adjustment (BGA) funding by £1.1 bn in 2026-27, with this difference rising to £1.2 bn by 2030-31. (9/10)

Stacked bar chart showing changes in Scottish Income Tax (SIT) and BGA for 2024-25 since budget-setting forecast in December 2023. It also has a marker showing the indicative reconciliation estimate at each forecast.

The latest indicative reconciliation for Income Tax in 202425 is -£310 m, which is smaller than previous estimates. Changes in the forecast BGA have been the main cause of this. The final reconciliation will be known in summer 2026 and applied in the 202728 Scottish Budget. (8/10)

Line chart of previous projections (published in December 2022, December 2023, December 2024, and June 2025) and the new projection (published in January 2026) of the Income Tax net position. All gradually rise over time, but the latest projection sits below the December 2024 projection from 2026-27 to 2028-29.

The Income Tax net position – the net funding available from income tax – remains positive and is expected to rise over time. This is consistent with previous projections. However, there can be revisions as projections are determined by comparing two large forecasts. (7/10)

Column chart showing Scottish earnings growth of 2.9 per cent in 2026-27 – revised up from 2.8 per cent in our December 2024 forecast – and UK earnings growth of 3.2 per cent in 2026-27, revised up from 2.1 per cent in the OBR’s October 2024 forecast.

Our forecast of Scottish nominal earnings growth in 2026-27 is broadly unchanged from our forecast in December 2024. On the other hand, the OBR’s forecast of growth for the UK has been revised up by 1.1 percentage points. This feeds through to the Income Tax net position. (6/10)