Exclusive:Scottish business firms in plea for help as Budget delay limbo hits hard

The Federation of Small Businesses said firms cannot afford to “sit and wait” for a Scottish budget that may not take place until next year.

And Dr Liz Cameron, chief executive of the Scottish Chambers of Commerce, said the longer that businesses had to wait for definitive budget plans, the greater the risks facing them and Scotland’s wider economic recovery.

Amid newly released figures which show the UK economy flatlined in July, the Scottish Retail Consortium (SRC) said “bold action” was required to help firms invest, support consumers, and reduce the cost of doing business, while the Federation of Small Businesses (FSB) said firms would be looking for signs of economic growth before considering investments.

The Office for National Statistics (ONS) said the economy saw zero growth in July. While that was in line with expectations, following a 0.4 per cent expansion in June, it does not ease the concerns facing Chancellor Rachel Reeves, who is tasked with kickstarting the economy and boosting growth.

It comes amid uncertainty about when the latest Scottish spending plans will be set out. With Ms Reeves not detailing what is in her Budget until 26 November - an announcement that will include the block grant underpinning Holyrood’s financing - it could be early 2026 before finance secretary Shona Robison outlines her own budget.

Dr Cameron said firms were being “left in limbo” at a time when clarity and confidence were “urgently needed,” adding: “Businesses are looking for decisive action to stimulate growth, reduce regulatory burdens, and unlock investment. The longer we wait for concrete spending plans, the greater the risk to business resilience and Scotland’s economic recovery.

“We need a clear and immediate signal that this government is serious about growth and that starts with the Chancellor unshackling business from the current tax burden in the UK Budget and creating conditions for investment and prosperity across the country. A fix for 2026 doesn’t help us survive in 2025.”

Ewan MacDonald-Russell, deputy head of the SRC, said the timing issues around the budgets should not mean that businesses are left waiting until close to the start of the 2026/27 financial year before making their own plans.

He said: “Retailers are caught in an unenviable trap where low economic growth means sales are flatlining whilst statutory costs continue to skyrocket. Weak growth is suppressing consumer confidence and household disposable incomes, which particularly impacts on discretionary spending.

“Meanwhile, government-mandated costs on retailers are mounting, with the rises in non-domestic rates and employers’ National Insurance contributions adding £200 million to Scottish retailers’ outgoings this year.

“That means there is enormous pressure on both the UK and Scottish Governments to deliver pro-growth budgets this year. Last year's UK Budget was tough for the industry, with billions of pounds of costs being imposed; which have now translated into higher prices for shoppers. Whilst last year’s Scottish budget contained some positive announcements; we hope both governments will deliver bold action this time to support consumers, help retailers invest in retail destinations, further tackle retail crime, and crucially reduce the cost of doing business.”

Mr MacDonald-Russell added: “The later UK Budget may mean Scottish ministers have to make key decisions on business rates and taxes affecting Scotland's retailers at pace. Whilst there may be a temptation to take more time over those decisions, the reality is that the later businesses understand the implications of the Scottish budget the trickier it is for firms’ financial forecasting and budgeting; especially if they come just a few short weeks before the start of the new financial year.”

Ms Robison told the Scottish Parliament earlier this month it is doubtful that the government will be in a position to present its budget before Christmas because of the need to analyse the plans laid out by Ms Reeves.

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Ms Robison added that unless the UK government reconsidered its later than usual date for the autumn Budget, it was “highly unlikely” that the SNP administration could bring forward its own budget and spending review ahead of the festive holidays.

Describing the delay in the UK Budget to the latest date in 10 years as “deeply disappointing,” she added: “Given the short period available before parliament dissolves in March, it is incredibly unhelpful that the initial parliamentary scrutiny will likely be delayed into January. It could not be clearer that Scotland is little more than an afterthought for the UK government.”

Colin Borland, FSB’s director of devolved nations, said: “The economy has stalled and we need urgent government action to kick-start it. July’s disappointing GDP result is just the latest evidence of how far we are from the kind of sustainable growth we all want to see.

“Small business confidence in Scotland was in the doldrums heading into the summer, and the general state of the economy was the single biggest obstacle to any ambitions to grow, closely followed by rising costs.

“The upcoming UK and Scottish budgets are clearly a major opportunity to change that for the better, but we can’t afford to sit and wait until the run-up to Christmas or into the New Year. Many owners will be looking for signs things are starting to pick up before considering investing in new products and services.”

Speculation is mounting that Ms Reeves may have to raise taxes to fill a black hole in the nation's finances. The pound slumped after the release of the latest ONS data, falling 0.3 per cent to 1.354 US dollars and 0.2 per cent lower at 1.155 euros in mid-morning trading on Friday.

The flat GDP figure for July came after the manufacturing sector saw activity pull back by 1.3 per cent - the biggest contraction since July 2024 . This held back growth in the wider economy, with the services sector up 0.1 per cent thanks to expansion of 0.6 per cent for retail as hot weather boosted the high street, and construction growing 0.2 per cent.