Grangemouth Refinery Shutdown Wipes Out Scotland’s GDP Growth, Official Data Shows

A Brutal Reversal After a Positive Start to the Year

After showing signs of modest recovery in early 2025, Scotland’s economic growth has stumbled backward.

According to the latest figures released by the Scottish Government, GDP fell by 0.4% in the three months leading to May. That number exactly offsets the 0.4% rise in the first quarter—putting the economy right back where it started at the turn of the year.

May alone saw a 0.2% monthly drop, following a slight 0.1% increase in April.

So, yeah—whatever momentum there was, it’s gone.

Grangemouth Shutdown at the Core of the Economic Slide

The main culprit? The closure of Scotland’s only oil refinery—Grangemouth.

The manufacturing sector saw the sharpest fall, and officials say that’s directly tied to the loss of refining operations at the Petroineos-owned plant. When Petroineos confirmed in 2024 that it would cease refinery operations and pivot Grangemouth into an import terminal, many warned this would ripple through the economy.

Now it’s more than a ripple.

• Grangemouth accounted for a significant chunk of Scotland’s manufacturing GDP.

• The plant’s shutdown meant lost output, supply chain disruption, and layoffs.

• Secondary industries—logistics, equipment, chemicals—also saw a slump.

One sentence here: This wasn’t just one factory closing; it was a cornerstone collapsing.

The Bigger Picture: Scotland Now Has No Oil Refinery

Petroineos’ move leaves Scotland without any domestic refining capacity.

All refined oil will now need to be imported—most likely by sea—adding layers of complexity and cost. That’s not just a logistics issue. It has serious implications for Scotland’s energy resilience, fuel prices, and long-term industrial strategy.

And for those pushing a “just transition” away from fossil fuels, this just made the job harder.

The closure has sparked new questions:

• Can Scotland maintain energy independence without domestic refining?

• What happens to regional employment in Grangemouth and surrounding towns?

• Is the government doing enough to support industrial communities during the transition?

Political Pressure Mounting on Both Holyrood and Westminster

It’s not just an economic headache—it’s now a political one too.

With the transition away from fossil fuels already a delicate balancing act, the closure adds fuel to the fire (no pun intended) for critics who say the shift is being mishandled.

Holyrood and Westminster are both being urged to act quickly.

One line here: This isn’t just about GDP—it’s about trust.

Workers at Grangemouth have voiced frustration over unclear retraining plans. Local leaders want support for alternative industries. National politicians are now under pressure to fast-track funding packages and just transition frameworks.

What’s Next for Scotland’s Energy Economy?

Scotland’s future energy map is in flux.

The government’s net-zero strategy leans heavily on renewables, carbon capture, and hydrogen—sectors still building up momentum. In the meantime, the refinery’s closure creates a supply chain gap that won’t be easy to plug.

Here’s a quick breakdown of key industrial factors:

Some experts say it could take 12–18 months for the economy to absorb the shock—if suitable alternatives are funded and deployed soon.

Others aren’t so sure.