Intelligence Hub
Economic Briefing August 2026
Introduction
This month’s briefing has three main themes. The first is the usual summary of the latest socio-economic data releases, including 2025 population figures. The next section focuses on the divergence in workforce numbers across central and local government over the last 25 years – and why any devolution needs to be accompanied by the resources to deliver. The final section outlines what the latest Scottish Housing Condition Survey tells us about fuel poverty and housing quality in the Region.
Latest Economic Statistics
- The UK economy continued to grow in the three months to June 2026, whilst inflation increased in the 12 months to July 2026. Scotland’s labour market weakened, although the Scottish economic inactivity figure fell by more percentage points than the UK figure.
- The latest National Records of Scotland data showed Scotland’s population growth slowed to less than 0.1% in 2025 – with migration continuing to drive the growth as deaths exceeded births nationally. Glasgow City remained Scotland’s largest local authority, and the only area in the Region in which births outnumbered deaths, albeit by a very small margin.
The Public Sector Workforce
- Over the last 25 years Central Government (UK) jobs have grown by 75% whilst local authority jobs have fallen by 28%.
- Within the Region, local authority headcounts have fallen by roughly 8% in the same period. Whilst Scottish Government Core Directorate and Agencies jobs have risen by 91% and 51%, respectively, since 2005.
- The most well-established English combined authorities now employ 750-1,000 staff, and various studies have highlighted that the capacity to deliver is as important as powers when it comes to successful devolution.
Scottish Housing Condition Survey
- GCR, on average, has a higher rate of fuel poverty than the average Scottish rate. There is potential for this fuel poverty to be driven by low household earnings, rather than particularly poor energy efficiency in the housing stock.
- There was a mixed performance in the Region across different housing quality indicators, with particularly poor performance in average household earnings in some GCR member authorities.
Latest Scottish and UK Economic Data
The latest estimates of Gross Domestic Product (GDP), Inflation (CPI), and the Labour Market have been published by the Office for National Statistics.
Quarterly GDP: UK GDP is estimated to have increased by 0.4% in the three months to June 2026. This is down from 0.6% from January to March but performance is still better than expected. The UK has seen the fastest growth this year of all G7 countries. However, economists warn that things could worsen with the ongoing conflict in Iran, and fears of rising energy prices later in the year. Services output grew 0.5%, Construction grew by 0.3% and Production showed no growth.
Inflation: CPI rose by 2.9% in the 12 months to July 2026, up from 2.6% in the previous month. This was the first time since March 2026 that the 12-month rate had increased.
Labour Market: Figure 1 shows the updated labour market estimates for April–June 2026, with a small increase in the employment rate in both Scotland and the UK. However, the latest data from HMRC shows payroll figures are marginally down on last year, so this needs closely monitored. Unemployment increased in Scotland, while the economic inactivity rate fell by a greater number of percentage points than in the UK. But Scotland’s economic inactivity rate remains above the UK level.
Figure 1: Labour Market Indicators
Updates from the Mid-2025 Scottish Population Estimate
In July, The National Records of Scotland (NRS) released the mid-2025 population estimates for Scotland, allowing for a review of population change in the Region.
Scottish Population: The mid-2025 estimate for the population of Scotland was 5,545,500 – a small increase of 2,200 individuals (0.1%) from the mid-2024 estimate. The rate of population growth between 2024 and 2025 was below the previous year’s increase of 0.6% and below the 20-year average of 0.4%.
GCR Population: half of GCR member authorities experienced a modest increase in population as outlined in Figure 2. Glasgow City remains the local authority with the largest population in Scotland, at 654,330. Its increase of 0.62% was greater than the Scottish and regional average and had the highest volume increase of 4,030 people.
Between 1981 and 2025 across GCR, Inverclyde recorded the largest fall (22.4%, or 22,632 people), followed by West Dunbartonshire (16.5%, or 17,461 people).
Figure 2: Population change in GCR, mid-2024-2025
Net migration continues to be a driver of population growth. For Glasgow, international net migration shapes growth, for the rest of the Regin, growth is primarily from ‘within Scotland’.
The mid-year population estimates provide key drivers of population change:
- International migration is the principal driver of population growth across GCR. With deaths continuing to outnumber births, as has been the case since 2015, positive net migration is essential to sustaining population growth. Of all arrivals in GCR, 76.2% were from overseas, compared with 23.8% from the rest of the UK, underlining the importance of international migration to the Region’s demographic outlook.
- Glasgow City has a distinct migration profile, serving as the hub of international migration in the Region. Glasgow City accounted for 7,140 of the Region’s net international migration gain of 7,440 people in 2025, with international arrivals offsetting substantial net out-migration to the rest of Scotland (-4,740). In contrast, member authorities including South Lanarkshire, North Lanarkshire and Renfrewshire recorded net population gains driven primarily by migration from elsewhere in Scotland, highlighting the differing demographic drivers across the Region.
Figure 3: Migration to GCR by origin, mid-2025 estimate
Figure 4: Net Migration to GCR by origin, mid-2025 estimate
Note: Some of the totals in Figure 4 do not match due to rounding.
The Public Sector
Central Government and Local Government Employment
Over the last 25 years, local government capacity has been significantly reduced, driven by major budget cuts.
- 25 years ago, the levels of local and central government employment were roughly equal.
- Since, local government capacity has been significantly reduced by sustained fundings cuts as budgets have not recovered to pre-2010 levels.
- Whilst numbers have stabilised over the past five years, local government staffing is 28% lower than it was at the start of the century.
- As noted in Figure 5, the picture for central government employment is quite different. UK central government employment is now 75% higher than it was in 2000.
- According to the latest data, Devolved Scottish Civil Service employment has grown by 75% since 2005 – which includes:
- 91% growth in Scottish Government Core Directorates and
- 51% growth in Scottish Government Agencies.
- Across GCR, it’s harder to assess employment changes (measured as headcount and not FTE) due to police and fire reclassification nationally and creation of ALEOs such as Glasgow Life .
- However, council workforce across the Region is 8% smaller than it was in 2000.
Figure 5: Share of total UK government employment, FTE equivalent, 2010-2022
English Combined Authority Staffing Levels
If the Region is to achieve the outcomes it wants from further devolution, there will need to be significant investment in the capacity and capability to deliver.
- Devolution– The Local Government Chronicle highlighted the recent Cabinet office policy paper ‘Rewiring the State’ paper which noted “we will work with authorities on a strategy to develop their capacity and capability, including through transferring resource from central government where functions will now sit at the regional or local level.”
- The LGC outlined the different levels of capacity across England. More established mayoral combined authorities have more capacity, such as the West Midlands CA with 991.80 FTE staff, and a £2.3bn budget for 2026-27, and the West of England CA which has 430 FTE staff with a budget of £416m.
- In contrast, places such as Devon and Torbay Combined County Authority have more limited capacity. Devon and Torbay CA has 5.9 FTE staff and relied on service level agreements with Devon CC and Torbay Council to provide additional capacity, with senior officers also provided through those arrangements.
Figure 6: Latest English Combined Authority FTE / Headcount Data
Note:
EMSA – Established Mayoral Strategic Authority
MSA – Mayoral Strategic Authority
NMFSA – Non-Mayoral Mayoral Strategic Authority
FSA – Foundation Strategic Authority
The Burnham Devolution ‘Vision’
Recent analysis of the new Prime Minister’s devolution vision highlights a clear need for a range of delivery resources to accompany any new responsibilities devolved to regions.
“Burnham’s speech began with a diagnosis that will be familiar to anyone working in sub-national governance. He described a “stark imbalance in resources” between national and local government, with councils unable to “fix potholes” let alone “bring forward major regeneration schemes.””
Rachel Riley, Local Policy Innovation Partnership Hub
In a recent critique of Andy Burnham’s devolution vision, the Local Policy Innovation Partnership Hub noted whilst there is a lot of evidence for the vision, it laid out a series ‘important warnings’ – which largely focus around the need for resources to deliver:
- “The devolution periphery is real. Without deliberate support for places that lack governance capacity, devolution risks creating new inequalities even as it seeks to address old ones.
- Institutional reform must be matched by fiscal reform. The German model Burnham admires works because constitutional principles are backed by fiscal equalisation mechanisms. The UK has nothing comparable.
- Long-term commitment is essential but politically fragile. Ten-year plans are welcome, but the UK’s track record of policy churn – from RDAs to LEPs to Levelling Up – gives reason for caution.
- Capacity and capability matter as much as power. Devolving powers to institutions that lack the staff, data, and expertise to use them effectively is not genuine empowerment.
- From aspiration to architecture: The gap between Burnham’s constitutional aspiration (gleichwertige Lebensverhältnisse) and the detailed institutional and fiscal architecture required to deliver it is the speech’s greatest vulnerability. Germany’s Basic Law principle works because it is embedded in a mature federal system with formal fiscal equalisation, constitutional protections for state powers, and decades of institutional practice. The UK would need to build this architecture almost from scratch.”
Who enters the Public Sector?
The Institute for Fiscal Studies examined the profiles of the individuals entering the public sector against the backdrop of public sector pay growth lagging behind the private sector.
Context: In 2008, graduates from the top five universities entering the public sector earned 1% more than those entering the private sector; by 2019, they earned 12% less. Despite this, the IFS found that graduate entry into the public sector recovered after 2012, suggesting that salary is not the sole determinant of career choice. (Further research is needed to understand the non-financial factors influencing these decisions.)
- Public sector recruitment has become increasingly graduate-focused – Following recruitment declines after 2009, graduates were more likely than non-graduates to enter the public sector by 2019, although this may partly reflect rising overall educational attainment.
- There is little evidence of ‘top graduate’ brain drain – Despite higher private sector pay and increased graduate entry into finance, technology and consulting, graduates from the top five universities continued to enter the public sector at broadly stable rates (14% in 2008 and 13% in 2019).
Figure 7: Share entering the public sector by highest level of education in the UK, 2008-2019
Note: ‘Top graduates’ are the graduates of the five universities that are most selective in terms of GCSE grades for their entrants. Their names are not disclosed due to privacy arrangements.
Who enters the public sector in GCR?
HESA graduate destination data provides insight into the educational backgrounds of those entering the sector in GCR.
Using HESA graduate outcomes data for 2017–2022 on graduates who studied in GCR and subsequently entered public sector employment, the analysis shows that:
- Fewer than one in three graduates who enter the public sector find jobs within the Region. Of the 2,900 graduates who progressed into public sector employment, only 27.5% were still employed in the public sector in GCR, highlighting a significant opportunity to improve graduate retention.
- With SDS reporting a demand across GCR for over 40,000 staff across Human Health, Education, Public Administration and Defence over the next couple of years, there will invariably be a need for significant number of graduates during this time.
- Developmental Psychology, Social Work, Development Studies, Childhood and Youth Studies, and Planning and Social Policy are the subjects whose graduates are most likely to enter the public sector.
USING HESA DATA TO INFORM RECRUITMENT
HESA data presents an opportunity for local authorities to strengthen partnerships with higher education institutions to improve graduate retention and build a more resilient public sector workforce.
Building on the Regional Skills Investment Plan and the 2023 Withers Report, member authorities could expand internships, placements and graduate pathways. The University of the West of Scotland’s Sustainable Urban Planning degree demonstrates the potential of this approach, with strong links to local government and the highest share of graduates entering the public sector in GCR.
This clear pathway into planning careers illustrates how closer collaboration between higher education and local authorities can help address workforce shortages and strengthen the public sector talent pipeline.
Housing Conditions and Fuel Poverty in GCR
Amid the rising cost of energy, the release of the Scottish Housing Condition Survey (SHCS) provides an opportunity to investigate a variety of the Region’s housing-quality measures.
- Fuel poverty has increased across Glasgow City Region – Fuel poverty rates have increased across the Region compared with the 2010–12 SHCS which is likely a reflection of rising household energy costs.
- Fuel poverty remains concentrated in the most deprived parts of the Region – Glasgow City, Inverclyde and West Dunbartonshire all recorded fuel poverty rates above the Scottish average, with West Dunbartonshire having the second-highest rate in Scotland.
- Extreme fuel poverty is particularly acute in West Dunbartonshire – Around 24% of households are in extreme fuel poverty, compared with the Scottish average of 17%. The remaining GCR authorities record rates broadly in line with or below the national average. West Dunbartonshire share of less energy-efficient homes is not above average, suggesting that low household incomes, rather than poor housing efficiency alone, are the key driver of fuel poverty.
Figure 8: Fuel poverty by member authority in GCR, 2022-24
Source:
Scottish Housing Condition Survey
Note: Fuel poverty occurs when a household must spend over 10% of its adjusted net income on fuel, leaving its remaining income below the minimum acceptable standard of living. Extreme fuel poverty occurs when fuel costs exceed 20% of net income.
Housing Condition in GCR
The release of the Scottish Housing Condition Survey also shines a light on the Region’s housing stock.
Takeaways from the SHCS on the regional housing stock include:
- Housing pressures remain more acute across GCR compared with the rest of Scotland – Using a weighted average, the Region has almost twice the Scottish rate of overcrowding (4% compared with 2%) and a higher proportion of dwellings below the tolerable standard (31% compared with 28% nationally), highlighting ongoing challenges around housing quality within the Region.
- Glasgow City’s housing stock is older, smaller and more likely to consist of flats than elsewhere in the Region and Scotland – Glasgow City has the highest proportion of households living in flats (74%) and in properties built before 1945 (43%), while also having the lowest share of households with three or more bedrooms (32%). These characteristics distinguish it from the other GCR authorities, whose housing profiles are generally closer to the Scottish average.
Figure 9: Overcrowding and Below Tolerable Standards Rates for GCR and Scotland, 2022-24
Housing Condition in GCR
The SHCS also provides insight into the average household income and the health of GCR residents.
The survey also provides some insight into the Region’s resident income levels including:
- Most GCR authorities have lower household earnings than the Scottish average – Only East Dunbartonshire and East Renfrewshire have household earnings above the national average. The income disparities across the Region are shown up by the fact that the remaining six authorities fall below it. West Dunbartonshire and Inverclyde record the lowest and second-lowest household earnings in Scotland.
- Several GCR authorities also experience higher levels of long-term sickness – The proportion of households with at least one member who has a long-term sickness exceeds the Scottish average (45%) in Inverclyde (51%), North Lanarkshire (48%) and South Lanarkshire (47%), suggesting that poorer health may be contributing to lower earnings through reduced labour market participation.
Figure 10: Average household income for GCR and Scotland, 2022-2024
Sources:
Contact
For queries, please contact:
Joseph.McGlynn@glasgow.gov.uk
Further Information
For queries and further information, please contact Christina Kopanou:
