Scottish Business Monitor, 2025 Q2

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Suri, Sanjam and Hampson, Josh (2025) Scottish Business Monitor, 2025 Q2. Fraser of Allander Institute, Glasgow.

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Abstract

Scottish businesses are showing tentative signs of recovery, despite tremendous uncertainty in business confidence and economic outlook for the remainder of 2025, according to the Fraser of Allander Institute at the University of Strathclyde. The latest edition of its quarterly Scottish Business Monitor, which surveyed over 300 businesses across all 32 local authorities in Scotland, revealed that companies reported an improvement in net balance in the second quarter in 2025 relative to the first quarter across various categories – volume of business activity, volume of new business activity, turnover, employment, and capital investment. While the overall net balances remain in negative territory, businesses surveyed reported a recovery after a tough start to the year in the first quarter. The only category where the net balance deteriorated even further from the first quarter was export activity as businesses reported a sharp decline from what was seen as a weak starting point in the first quarter of the year. The report also found that more than 60 per cent of businesses have adjusted their operations because of the rise in employer National Insurance Contributions (NICs), with many adapting to this through a combination of strategies: cutting back on hiring or cancelling increases in their workforce, adding the extra costs on to prices, and reducing employee benefits and compensation packages. Nearly 40 per cent of businesses surveyed expect to make more adjustments down the road.

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