The Scottish Budget comes at a pivotal moment for the Scottish Government. With record levels of devolved funding from the Westminster government announced in the UK Budget, there is no time to waste to build momentum to achieve long-term sustainable growth. It is also an opportune time to put Scottish business on the map by embarking on a new period of effective collaboration between the Scottish and UK governments, in partnership with business.

With Scotland facing a challenging economic and fiscal situation, the CBI’s annual Scottish Budget submission sets out how the government can give business the certainty and confidence needed to accelerate investment and supercharge growth.

Mags Simpson, interim director at CBI Scotland, said: “If the Scottish Government is serious about growth, it must get to grips with the sluggish investment that has plagued the economy in recent decades and tackle Scotland’s underperforming business investment which, as a share of GDP, lags the rest of the UK’s.

“The Budget, and accompanying tax strategy, must focus on addressing uncompetitive tax policies that are acting as a handbrake on growth. The Scottish Government should commit to meeting these challenges head-on by prioritising long-term economic growth over short-term revenue raising measures.

“Delivering a long-term review of the non-domestic rates system, as the UK government have pledged for England, and a freeze in the basic, intermediate, and higher property rates, would go a long way towards supporting firms facing rising costs.

“With Scotland’s super natural advantages, there big growth opportunities available in the net zero economy, particularly in areas such as on and offshore wind, and carbon capture and storage. Building confidence behind the Scottish Government’s Green Industrial Strategy by setting out how announcements, such as establishing Scotland’s first planning hub, will be funded and realised, can deliver real momentum for growth.

“With the announcement in the UK Budget of a record £47.7bn for the Scottish Government in 2025/26, including a £3.4bn top-up through Barnett consequentials, the Finance Secretary can provide further funding to make Scotland a more attractive destination for investors, and support a sustainable economy. Our Budget submission identifies dynamic yet practical solutions that Scottish businesses are calling to be prioritised.”

Key to this includes:

• Competitive business environment
  
  • Ensure the new tax strategy prioritises long-term economic growth over short-term revenue raising measures, focusing on the principles of certainty, simplicity and international competitiveness.
  • Commit to avoiding further income tax divergence from the rest of the UK and commission an independent review evaluating the extent to which income tax divergence has impacted Scottish competitiveness.  
  • Conduct a longer-term review of the non-domestic rates system, maintaining a focus on the principles outlined in the Barclay Review while addressing long-term concerns about fairness in the system. 
  • Freeze the business rates multiplier for 2025-26 to support businesses facing rising cost pressures and reverse the decision to introduce a business rates surtax for certain larger retailers. 
• Green growth
  
  • Build on the planning announcements made in the Programme for Government and Green Industrial Strategy with concrete actions, detailing implementation timelines backed up with clear funding mechanisms. 
  • Utilise devolved powers to speed up the construction of electricity transmission infrastructure and streamline grid connections by upholding planning timescale commitments and launching a campaign explaining the importance of transmission infrastructure for the economy and energy security.
• Futureproof the labour market
  
  • Based on the insights from previous reviews, publish one consolidated skills strategy and action plan, setting out the role businesses, education authorities, training providers, and government will play, alongside a clear timeline and metrics to measure impact. 
  • Align skills funding more closely to industry need by striking a better balance between undergraduate learning, work-based learning, and short, sharp provision to support continual upskilling and rapid retraining. 
  • Expand technology adoption support packages – such as Digital Boost – to support SMEs to adopt productivity boosting technologies. 
• Evolve infrastructure and connectivity
  
  • Publish a strategy for retrofitting and repurposing existing infrastructure across Scotland, outlining key projects and timelines for development.  
  • Ringfence funding to enhance critical road routes and set out a strategy to reduce travel time to key economic hubs in Scotland and the rest of the UK.  
  • Announce a target to deliver 25,000 new high-quality, energy efficient homes across all tenures per year, recognising housing as a core economic enabler.