More than a third of Scottish companies now believe economic conditions are better than a year ago, the highest share recorded since a quarterly business tracker began in June 2023. The Understanding Business survey of more than 500 firms, carried out in September, found 35 per cent reporting an improvement, up 11 points since June.
The tracker is run by research firm Diffley Partnership and Edinburgh-based Charlotte Street Partners. Its latest wave follows John Swinney winning his first personal mandate as First Minister and the formation of a new UK government under Andy Burnham. Despite the rise in optimism, 43 per cent of firms still say conditions have worsened over the past year, and 22 per cent think they are about the same. Looking ahead, 38 per cent expect headwinds to ease within 12 months, also up 11 points, while 37 per cent expect things to get worse and a quarter foresee no change.
Company outlooks have brightened as well. Some 46 per cent of businesses expect profitability to rise over the next year, up eight points, and 45 per cent expect turnover to grow, up five points. Views of both governments have improved. Over half of firms (56 per cent) believe the Scottish Government cares about the needs of industry, and 50 per cent say it is taking action on business concerns, a rise of ten points. For the UK Government, 43 per cent think it cares about business and 35 per cent say it is acting on their concerns, although 42 per cent disagree.
The survey also tested several policy ideas. A 20 per cent cut in business rates for pubs, clubs and live music venues across Scotland, one of Burnham’s early announcements, was backed by 77 per cent of firms, and 58 per cent agreed that metro mayors would help promote growth. Opinion was split on AI data centres: 49 per cent favoured a temporary pause on approvals until their effect on energy, communities and the environment has been assessed, while 48 per cent wanted Scotland to support new developments to attract investment and jobs.
Scott Edgar, head of analysis and insights at Diffley Partnership, said the results pointed to “a notable improvement in sentiment among Scottish businesses”, along with more positive views of both governments. Malcolm Robertson, founding partner at Charlotte Street Partners, said firms were encouraged by what were in effect two new governments. Even so, about 39 per cent of respondents said they were not confident that their own actions would support growth, suggesting a sizeable group of businesses remains cautious.
