Economy ‘losing momentum’ as confidence dips – Daily Business

Scottish businesses are increasingly pessimistic with confidence dipping in the final quarter of 2025 to its lowest point of the year.

The survey of 550 businesses by the Scottish Chambers of Commerce and Fraser of Allander Institute found for the first time in three years more firms expect turnover to fall than to rise in the next quarter.

Pressure from labour costs and taxation continued to dominate firms’ concerns. Only 15% of firms said they would increase investment, the lowest level recorded in 2025,  while 77% reported increased pressure from labour costs.

Two-thirds (65%) are expecting to raise prices, up ten percentage points over the quarter and the highest level recorded in 2025.  This is also the highest figure since Q1 2023.

The survey, though traditionally on the gloomy side, concurs with a British Chambers of Commerce survey at the turn of the year which found less than half of respondents (46%) are expecting increased turnover over the next 12 months – the lowest level in three years.

The SCC data comes at a sensitive time for ministers with the Scottish Budget to be delivered on Tuesday and companies hoping it will provide some further support, not least on business rates.

Doug Smith, vice president of the SCC, said: “These results point to an economy that is losing momentum rather than turning a corner.

“Worryingly, confidence has weakened again, sales are under pressure, and firms are cutting investment at a time when growth should be gathering pace.

“Particularly concerning is the forward-looking picture: more firms expect turnover and investment to fall than to rise for the first time in three years; rising labour costs and taxation worries are now firmly embedded, with pricing decisions entrenching inflationary pressures for consumers as well as businesses.

“With investment faltering and confidence fragile, policy choices at Holyrood and Westminster matter more than ever. A clear focus on competitiveness, skills and planning, alongside a stable and predictable tax environment, is essential to restore confidence and put the economy back on a path to sustainable growth.”

Liz Cameron, director and chief executive of SCC, said: “After a tough Autumn Statement and fresh pre-Budget jitters ahead of the Scottish Government’s announcements tomorrow, business confidence is at a worryingly low level.

“Our largest survey in years underlines the growing strain placed on businesses by the tax system, and a lack of meaningful policies to tackle the structural challenges facing our economy.

“In December, we urged the Scottish Government to use their Budget to boost planning capacity, prioritise skills funding, and freeze business rates.

“Since then, businesses across every sector have been hit with eye-watering rates hikes, with some warning the increases will price them out of existence this year.

“Tomorrow is a pivotal moment. The Scottish Government must act decisively to restore confidence and put Scotland’s businesses back on the front foot.”