I've a late 03 octavia 1.4 and the temperature hand keeps rising and falling. I've changed the thermostat and the radiator temperature switch but still keeps doing it. Any ideas ?

I'd suspect the coolant temperature sensor (CTS), even if the fuel economy is still as ever, because the CTS has 2 channels, one supplying the Engine Management System and the other supplying the facia gauge.

 

To confirm this, you will need to get codes read using VCDS or a VAG dealer's diagnostic computer (shareware VCDS plus a cable will cost less than a dealer visit).