Scotland’s economic growth will be eroded by rising costs and global pressures, according to the Fraser of Allander Institute which has downgraded its forecast for the year.

The University of Strathclyde think tank said the tariffs being introduced by Donald Trump will add to the uncertainty already created by the Chancellor’s hike in employers’ national insurance contributions and wages for the low paid.

Economic growth of 0.9% is now expected this year, with 1.1% forecast for 2026. This is coincides with a revision for the UK by Goldman Sachs which has downgraded its expectations to from 0.9% to 0.8%.

The Fraser of Allander said the change was due to “ongoing concerns over global economic fragility, tighter UK fiscal policy, and lingering inflationary pressures”.

Professor Mairi Spowage, director of the Institute, said: “Economic conditions in 2025 are turbulent and uncertain, and are likely to remain so throughout the year. Therefore, the picture is still one of subdued growth. Many of the challenges businesses faced in 2024 – from rising costs to policy uncertainty – have not gone away.”

And although UK headline inflation dipped to 2.8 per cent in February, the think tank said this was “unlikely to bring significant relief to Scottish households”.