'Sustained decline' in rural Scotland after 4.5 per cent drop in growth

A 4.5 per cent drop in growth in the rural sector, including farming, forestry and fishing, has been recorded north of the Border, according the latest Scottish Government GDP estimates.

Since the third quarter last year, during which there was a 1.9 per cent growth in the sector, figures have shown a consistent decline.

The final quarter of 2024 saw a drop of 1.5 per cent, while the last three quarters of 2025 have seen a drop of 3 per cent in total.

The decline comes a year after Westminster announced its controversial changes to Agriculture and Business property relief (APR and BPR).

The proposals, which come into effect from April next year, will see a 20 per cent tax on farms valued over £1 million when they are inherited.

Read more: Clan chief calls to stop farm tax as barley prices drop by almost a third

Ministers said the reforms were “vital” to “fix” the public services in Britain.

Wednesday’s UK Budget heard Chancellor Rachel Reeves offer a concession to farmers and small business owners who are married, are in a civil partnership or have deceased spouses. The update confirmed they would be able transfer their inheritance tax allowance of up to £1 million of full relief to each other if one of them dies without having used their allowance.

The change means a farmer could leave their £1m allowance to their partner, and use their own £1m allowance to pass on £2m of farmland to their children without paying inheritance tax.

The National Farmers’ Union (NFU) said the recent concession “goes nowhere near far enough to remove the devastating impact of the policy on farming communities”.

Earlier this year, independent research by CBI-Economics, which involved more than 4,000 businesses and farms across the UK, found 49 per cent of farmers paused or cancelled investment in their businesses. The report found the decline was in relation to existing policies.

Commenting on the GDP figures, Scottish Conservative MSP Tim Eagle said: “This is further evidence of how the SNP are presiding over a sustained decline in industries that are crucial for the economy and jobs in rural Scotland.

“I have repeatedly called for more support for rural Scotland, including our critical Scottish agricultural industry. The cuts the SNP have imposed in the rural budget over the years has caused major issues in the forestry sector and a much-needed lift in the agricultural budget last year never came.

“Labour’s family farm tax is already a massive worry for many in the sector with the potential knock-on consequences that will arise from it. Hearing that there has been a 4.5 per cent reduction in growth in the sector over the last year should make alarm bells ring in the heads of decision makers.”

Rural Affairs Secretary Mairi Gougeon insisted the Scottish Government had “a strong record” of delivering support schemes to the farming sector.

“We deeply oppose the changes the UK government has made that are putting the future of many family farms at risk, not least the ill-thought through changes to inheritance tax,” she said.

“We, alongside the sector, continue to push for multi-year funding agreements that would allow both government and farmers to plan more effectively.

“Where we have the powers to protect and support the agriculture industry, we are doing just that with the most generous direct support package in UK, showing that policy made in Scotland works for farmers.”

UK ministers argue three quarters of estates will continue to pay no inheritance tax at all, while the remaining quarter will pay half the inheritance tax “that most people pay,” with payments being spread over ten years, interest-free.

Westminster said most estates claiming APR and BPR will be unaffected by the changes, suggesting its latest research showed 40 per cent of APR - worth £219m - was directed to just 117 estates.