Scottish small business growth forecasts rise for first time in 2026 but Budget fears persist

Some 25 per cent of smaller firms are anticipating growth over the next three months, according to the latest business barometer from specialist lender Novuna Business Finance. That marks a significant rise on 15 per cent this time last year and the first uptick in growth forecasts for 2026 as a whole.

However, the percentage of small businesses forecasting growth remains significantly down on the second half of 2024 and the early months of 2025.

The new findings come at a time of economic volatility, with the average price of diesel rising above £2 a litre for the first time and growing concern over the impact of government borrowing on inflation and interest rates.

Meanwhile, many of Scotland’s small businesses are also worried about what could be announced in the Budget later this month - with 48 per cent of firms saying that further hikes to national insurance would negatively impact the growth outlook and finances of their business. Some 35 per cent of firms are also worried about the impact of potential rises in corporation tax.

Novuna’s business barometer study has tracked small business growth forecasts every quarter since 2014.

Jo Morris, head of insight at Novuna Business Finance, said: “From our latest data, it is good to see an improvement in small business growth forecasts in Scotland. While the end-of-year rally is modest, the overall position remains some way behind the growth forecasts seen in 2024 and early 2025.

“Our quarterly research this year shows that many small businesses are working hard to absorb the pressures of rising fuel and energy costs. Many are also concerned about how further tax, inflation and interest rate changes could impact their growth plans. At the same time, the majority of smaller businesses have not yet fully worked through whether and how AI could practically help business growth.

“Despite all the headwinds, what we have seen since the Covid era and the cost-of-living crisis is that small business owners are resilient,” she added. “They dislike uncertainty, but they find ways to adapt, innovate and pursue growth.”