Understanding Scotland Economy Tracker - November 2024

Our independent quarterly tracker has revealed that 48% of people living in Scotland believe their financial situation is worse than a year ago.

Since August 2024, there has been a six percentage point rise in people feeling that their own finances have worsened in the last year – with 3 in 10 people (29%) admitting they have lost sleep over money.

While 63% believe that the general economic conditions are worse, up nine percentage points, 65% of people said they believe that the general economic conditions will continue to decline, up 13 points on the last quarter.  

The latest results for the Understanding Scotland Economy Tracker, from the David Hume Institute and polling experts Diffley Partnership, suggest a growing lack of optimism over the last three months and pose big questions for Shona Robison ahead of the Scottish Budget.

The latest edition of the survey from November 2024 shows that:

• More than 1 in 6 people (17%) report strained relationships at home because of money

• 1 in 6 Scots (16%) report an impact on their physical health due to worries about money

• 1 in 3 people (32%) report an impact on their mental health due to worries about money

• Only 15%  say that concerns about money matters have not affected them

• 3 out of 4 people (75%) believe the economy works primarily in the interests of wealthy people

However, there is not a complete lack of optimism with younger Scots more likely to believe that their financial fortunes will turn. Those aged between 16 and 34 appear more optimistic with 25% saying they believe their own economic situation will get better. This compares to just 6% of 45 to 54 year-olds, 8% aged 55 to 64, and 5% of over 65s.

When looking at the policy priorities for Scots, healthcare and the NHS remains the top priority of Scots with nearly half (47%) citing this as one of the top three issues facing Scotland.  A third (34%) cite cost of living and inflation, this has declined eight percentage points from November 2023. One in five (19%) put poverty/inequality among the top three issues facing Scotland.

Understanding Scotland Economy Tracker - August 2024

29th August 2024

Our independent quarterly tracker has revealed that one in three (36%) people living in Scotland consider the cost of living as one of their top concerns, down 12% on this time last year.

According to the Understanding Scotland Economy Tracker from the David Hume Institute and polling experts the Diffley Partnership, while concern about the cost of living has fallen, healthcare remains the key concern for the public, selected by over half (51%) of respondents as a key worry.

The data was collected at the start of August, a month after the General Election, against a backdrop of economic insecurity, mounting concern about public expenditure and a wave of anti-migrant riots.In our first survey since the General Election, data reveals some green shoots of optimism.

• Over half (54%) of people in Scotland believe that general economic conditions are worse now than a year ago - a considerable fall from the 2 in 3 (66%) that agreed with this statement in May.

• 1 in 3 (35%) of those that express an opinion believe that general economic conditions are about the same as they were in August of last year, an increase of 11%. 

• 15% of households with children say they feel better off than a year ago, compared to 10% reporting the same in August 2023 and 9% in August 2022.

Read more:

• Press Release - Green shoots of optimism as fewer Scots concerned by cost of living

• David Gow's Blog - Are we singing a new song?

• Watch the event recording here.

The Great Risk Transfer: employment and financial wellbeing

20th August 2024

This research examines the impact of the Great Risk Transfer on individuals and society through the changing relationship between employer and employees.

What are the implications on productivity and aspirations for economic growth?

The report shows that a third of employers only provide the bare minimum when it comes to sick pay and pensions.

It also highlights how staff in hospitality, retail and social care are the most financially vulnerable and that over a quarter of Scots lose sleep over money worries.

The research finds:

• more than two-thirds of employers (70 per cent) are concerned over the impact of financial strain on their employees and their productivity, citing increased stress on managers and other staff (35 per cent) and a rise in absenteeism due to poor health (28 per cent)

But

• a third of employers (33 per cent) in Scotland do not offer any enhanced benefits as part of their employee benefits package

• more than half (56 per cent) do not currently include financial wellbeing in strategies to support employees.

The Great Risk Transfer report recommends the need to:

• Recognise employers’ power to drive change. Employers should recognise the connection between financial wellbeing and productivity and how their actions might alleviate employee’s pressures 

• Increase understanding of Living Pensions: Government and employers should work together to increase understanding of the need for Living Pensions and that employees on auto-enrolment minimums are not currently likely to be saving enough to live well in retirement

• Complete the Pension Provision Review. The review of pensions provision signalled by the Labour Party before the 2024 election should go ahead and include a specific focus on potential improvements and innovations in workplace pensions.

This is the second piece of research the David Hume Institute has produced in partnership with the Institute and Faculty of Actuaries about the Great Risk Transfer.

David Hume Institute commissioned the Diffley Partnership, to investigate employer attitudes to the Great Risk Transfer as part of this research. The survey was conducted in May and June 2024 and is based on responses from 550 businesses. The full survey results were published as an appendix to the main report.

Read more:

• Press release - Bare minimum from many employers driving poor productivity.

• Watch the event launch recording here.

Image credit: sharing thumbnail image by The Chaffins free from Unsplash on 07.08.2024

Understanding Scotland Economy Tracker - May 2024

The latest survey from the Understanding Scotland Economy Tracker series reveals that healthcare and the cost of living are at the forefront of Scottish voters' minds as they get ready to decide how to cast their votes in July. 

Latest findings from the series show the top two issues for voters in Scotland are:

• one in two Scots (52%) cite healthcare and the NHS

• two in five (40%) the cost of living and inflation is a key issue.

A host of other issues remain important to Scots, including poverty/inequality, trust in politics, the economy, and housing, which are regularly selected as top issues facing Scotland by upwards of 15% or more of Scots. However, there are notable changes in prioritisation among these issues, with emphasis on trust in politics rising two percentage points to 18% and emphasis on the economy falling two percentage points to 17%.

The constitution and devolution is reported as a top issue by only 7% of Scots in the latest figures for May 2024.

Read more:

• Press release: Health Care and Cost of Living Top Priorities for Scots ahead of General Election.

• David Gow’s blog: Shaking off our misery?

• Catriona Matheson’s blog: People’s priorities laid our for politicians.

• Watch the event recording here.

Understanding Scotland Economy Tracker - February 2024

Our survey shows two in three Scots (67%) have resorted to reducing non-essential purchases, while significant proportions continue measures such as cutting back on energy use (64%) and leisure activities (62%).

Additionally 45% report decreased savings contributions, and over a third are tapping into them for everyday expenses. These coping mechanisms are particularly prevalent among younger age groups, underscoring the disproportionate impact of the high cost of living on working-age individuals.

The Understanding Scotland Economy Tracker survey tracks economic attitudes and spending intentions from more than 2,000 members of the Scottish adult population every 3 months.  The fast turnaround time, as the data is published two weeks after collection, means early identification of changes in trends to support decision-makers.    

The study reveals a cautious outlook among Scots regarding future spending. Both essential and non-essential spending expectations show little change, indicating ongoing caution amidst economic uncertainty.

Furthermore, the latest findings highlight generational divides in priorities.  Healthcare and the NHS are paramount among older age groups, whilst younger individuals are more focused on addressing rising living costs.

The study also reveals growing doubts among Scots about Scotland's trajectory, with the majority (58%) believing that the country is heading in the wrong direction. This marks a three-percentage-point increase from the previous wave and reflects an increasing sense of pessimism about the future.

Read more:

• Press release - Two thirds of Scots continue to reduce spending.

• David Gow’s blog - Scotland’s Generational divide - the economy.

• Watch the launch event recording here.

Understanding Scotland Economy Tracker - November 2023

The Understanding Scotland Economy Tracker, produced by the David Hume Institute and the Diffley Partnership, marks its second birthday, showing many Scots continue to take extreme measures to navigate turbulent economic times:

• 1 in 6 people (17%) report skipping meals

• 1 in 5 people are using ‘buy now pay later’ payment plans

• 2 out of 3 people (67%) are not putting the heating on to reduce costs

For many, the ongoing challenges with the cost of living are dominating their lives with:

• 3 in 10 (29%) Scots telling us they are losing sleep due to their personal finances

Many Scots are living with severe financial precarity:

• 3 in 10 people (28%) are not confident of covering a £100 emergency expense – up three percentage points since February 2023

• This rises to 1 in 2 (49%) for an emergency expense of £500

The survey also shows 8 in 10 Scots perceive the economy as favouring the wealthy (78%), while 53% believe it primarily serves business interests.  Only 1 in 10 (10%) believe that the economy works in their own interest.

Healthcare (48%) and cost of living (42%) remain among the top concerns for Scots. 

Over three-fifths of Scots (62%) view the cost of living and inflation as a key economic priority, though this is down five percentage points from August. Poverty has become a significant concern for 32% of respondents, up three percentage points from August.

The Understanding Scotland Economy Tracker survey gathers economic attitudes and insights from more than 2,000 members of the Scottish adult population every 3 months to track changes over time. 

Read more:

• Press release - Two years of tracking shows Scots struggling with turbulent economic times.

• Shan Saba’s blog - Avoiding the cost of living carnage.

• Watch the event recording here.

The Scottish Home Report - why we need a review?

by Professor Stewart Brymer

Professor Stewart Brymer makes the case for why a review of the Scottish Home Report is needed and how it will benefit the overall aim of delivering a better built environment in Scotland – which is itself integral to economic development

Image credit: Photo by Kirsten Drew free from Unsplash on 20.08.2024

The Scottish Home Report consists of a single survey, an energy performance certificate and a property questionnaire – the latter being completed and signed by the selling home owner.

The single survey provides a comprehensive guide to the condition of the property, together with a valuation. In principle, therefore, it provides much more detailed information to both house buyers and sellers than is usually the case at present and avoids the need for competing house purchasers to commission separate surveys and valuations. It also ensures that there is an independent valuation of the property available so that potential buyers do not have to rely on the upset price or ‘offers over’ price to decide if it is likely to be affordable. In practice, there are variances in some locations on marketing techniques but in general, this has resulted in properties being marketed at or around 95% of the valuation in the single survey – the valuation being based on recent comparable evidence. The main point of negotiation with surveyors was the issue of liability. It was agreed that the surveyor’s duty of care would pass to the ultimate buyer.

Despite initial reservations, the Home Report has worked well in Scotland. However, it is not perfect. This paper discusses why a review is now required to support improvement.

About the Author

Professor Stewart Brymer graduated with First Class Honours in Law from the University of Dundee (1979).  He is a past-convenor of the Property Law Committee of The Law Society of Scotland and co-Founder of the Scottish Conveyancers Forum.

Stewart is a member of the Professorial Panel on Property law matters and is an Honorary Professor at the University of Dundee. 

He is also a prolific writer and is co-author of “Conveyancing in the Electronic Age” and “Leases” with Professor Robert Rennie and “Professor McDonald’s Conveyancing Manual” along with over 175 articles on Conveyancing and Leasing law.

 Why is DHI thinking about the Home Report?

There is much discussion about the quality of the housing stock in Scotland.  The need to retrofit ageing housing stock to cope with changing climate in the years ahead is a frequent subject of conversation.  In our previous work on the Scottish Land and Building Information System (ScotLIS), the potential for improvement in the Home Report came up in discussion but we were not able to fully explore the issue.  This discussion paper makes the case for why a review of the Home Report is needed and how it will benefit the overall aim of delivering a better built environment in Scotland – which is itself integral to economic development.

Understanding Scotland Economy Tracker - August 2023

The most recent data from the David Hume Institute and Diffley Partnership’s regular economy tracker reveals a mixed picture of public opinion on the economy.

Research shows extreme cost-saving behaviours in how Scots shop, eat and live are likely to have a disastrous long-term effect on the nation’s health.

Rising cost of living continues to dominate people’s priorities. Around half (48%) say this is a top issue facing Scotland. Two-thirds (67%) say this is a top issue for the Scottish economy.

In response, Scots report that they are shopping around, changing brands or shops, and buying reduced food to cope with rising prices.

But many are engaging in extreme cost-saving behaviours, which may have disastrous health consequences:

• 1 in 7 (15%) are skipping meals

• 1 in 4 (24%) are buying fewer fruits and vegetables

• 1 in 4 (25%) are choosing foods that require no or little cooking such as pot noodles

• More than 1 in 4 (27%) are consuming more packaged or processed foods instead of fresh alternatives.

These changes have serious public health consequences and risk exacerbating pre-existing inequalities, as working class hit hard by rising prices; over 1 in 5 (22%) of those in social grades C2DE report that their finances are much worse now than a year ago.

Scots remain sceptical and pessimistic about Scotland’s economy and direction. Over a third (38%) say that economic conditions are much worse now than a year ago, down from almost half (46%) in May, and over half (56%) believe that things in Scotland are headed in the wrong direction.

Large swathes of the population remain dissatisfied with the actions and support offered by UK and Scottish Government, local authorities, energy companies and the Bank of England. Over 80% feel that these actors have done too little to help people cope with rising prices.

Read more:

• Press release - Cost of living is a ticking time bomb.

• Press coverage - Jeremy Grant reflects on our latest Understanding Scotland economy event.

• Blog - Paying a high price for poor nutrition.

• Blog - Is Social Security Scotland a waste of money?

• Watch the event recording here.

Understanding Scotland Economy Tracker - May 2023

The most recent data from the David Hume Institute and Diffley Partnership’s regular economy tracker reveals a mixed picture of public opinion on the economy.

The economic outlook from Scots remains bleak with 62% thinking that general economic conditions will be worse in a years’ time (although this is down very slightly from 66% in February) and 45% think their personal financial situation will be worse in a years’ time (down from 48% in February).

However, while we have seen a reduction in the number of people thinking that things will be worse, optimism is not rising. Many Scots think that the economic outlook will remain the same over the next 12 months suggesting that they think that the costs and challenges they face are here to stay.

Is this a sign of people adjusting to a new normal?

In order to meet increased costs, many Scots are running down their savings, turning to credit and stopping paying into pensions:

• 4 in 10 Scots (42%) report having taken money out of their savings to
  cover higher costs

• 1 in 4 have used a credit card to make for purchases that they wouldn’t
  usually

• 1 in % have used ‘buy now pay later’ schemes to cover everyday
  spending

• A small but increasing number of Scots have stopped contributing to a
  pension (7%)

Turning to high-cost borrowing options for everyday essentials can cause the accumulation of substantial debt which will affect people’s lives for many years to come.

The Understanding Scotland: economy tracker is produced in partnership between the David Hume Institute and the Diffley Partnership. The survey gathers economic attitudes and insights from more than 2,000 members of the Scottish adult population every 3 months to track changes over time.

Read more:

• Press release - The cost of living is driving difficult choices.

• Blog by Shona McCarthy - Budgeting to save a global asset.

• Watch the event recording here.

Is trust an undervalued ingredient for a thriving economy?

Discussion paper by Charlie Woods

Published May 2023

Labour market disputes, concerns about public contracts and declining trust in government and institutions have risen up the news agenda in recent times.  All of these things impact on our economy but the importance of trust in building thriving economies, as an issue in its own right, feels under-explored. 

When governments talk of increasing productivity and economic growth, are they focusing sufficiently on the challenges posed by an unhappy workforce or the hours lost in contract disputes?  This paper argues that, although improving levels of  trust can take time, it is time well spent as it saves resources in the long term.

This paper aims to stimulate discussion about the role that trust and more collaborative relationships can play in strengthening the economy. It is written from the perspective of experience in working to stimulate economic development, help resolve commercial conflicts, facilitate dialogue and develop more effective relationships. 

This paper builds on previous David Hume Institute work on the labour market including the 2020 briefing paper on the Danish model of Flexicurity. 

About the Author

Charlie Woods has wide-ranging experience of industry, commerce, and public and private sector organisations, ranging from SMEs to government. He was previously Director of Strategy and Chief Economist at Scottish Enterprise and is now executive director of the Scottish Universities Insight Institute and Vice-Chair of the Economic Development Association Scotland (EDAS).

Charlie is an Associate of Core Solutions and has extensive mediation and facilitation experience in a wide range of fields including planning, family business, management, PPP contracts, transport infrastructure, government policy and professional services.