Scottish business groups have delivered a mixed response to the Scottish Government’s draft Budget for 2026-27, welcoming some measures on skills, rates and sectoral support, while warning of competitiveness risks, tax burdens and underlying fiscal pressures.
David Lonsdale, Director of the Scottish Retail Consortium, said the limited rates relief for retail and hospitality fell short of what businesses require.
He said: “Scottish Ministers seem to have their heart in the right place by providing a limited business rate discount for retail and hospitality businesses; but we fear they have significantly stumbled on the detail. At first glance, the cap on the relief which can be claimed means it falls well short of the permanent business rate discount on offer to retailers in England.”
Mr Lonsdale warned that failing to match England’s more competitive regime could undermine investment decisions and employment in Scotland’s town and city centres.
He said: “Medium-sized and larger retailers underpin the vitality of our high streets and town and city centres. Those businesses drive footfall and account for a large share of retail employment. By fumbling the chance to adequately match England's more competitive rates regime we risk becoming materially less attractive as a location for investment.”
However, he welcomed the continuation of funding to tackle retail crime, adding: “It's worth noting Ministers have clearly listened to our representations and acted positively in straightened financial circumstances to continue the £3 million funding for the Retail Crime Taskforce.”
Responding on housing and property, Propertymark said the Budget failed to address the scale of Scotland’s housing emergency or the growing tax burden on the sector.
The organisation said: “Despite a multi-year commitment to affordable housing supply and increased investment in acquisitions and homelessness prevention, it is surprising that the Scottish Government are yet again failing to tackle the housing emergency, and the Budget misses an important opportunity to address the growing tax burden on housing.”
It added that Land and Buildings Transaction Tax continues to act as a barrier to mobility and investment, warning: “Without this focus, the current property tax regime does not encourage people to move, right size or relocate for work, while also deterring landlords from investing in much-needed rented homes.”
The Institute of Directors Scotland said the Budget landed at a time of fragile business confidence but welcomed some measures on skills, rates and tax thresholds.
A spokesperson said: “Today’s budget lands at a time when business confidence in Scotland remains fragile. We welcome many of the Finance Secretary's announcements, and while some elements will require closer scrutiny, the commitment to further funding for colleges, reduction of business rates and increase to income tax thresholds is a step in the right direction.”
However, it cautioned that stability would be essential for long-term planning, particularly with an election approaching.
In the energy sector, Claire Mack, Chief Executive of Scottish Renewables, said the Budget maintained support for offshore wind and the supply chain.
She said: “The latest Scottish Government budget maintains support for the offshore wind sector and is expected to develop supply chain companies, encourage export activity, and contribute to the development of skills across Scotland.”
Ms Mack also welcomed further progress on the Scottish Government’s £500million offshore wind supply chain commitment, saying: “We will work closely with the Scottish Government to ensure this funding is deployed in a way that gives industry the certainty it needs to invest the infrastructure and manufacturing capacity required to secure Scotland's offshore wind future.”
Economists at the Fraser of Allander Institute were more critical of the underlying fiscal position, warning that the headline announcements masked significant spending pressures.
In its initial assessment, the Institute said: “What does take effect in less than three months’ time is a significant cut in spending, even if you wouldn’t know it from the Budget speech.”
It added that the Scottish Government continued to rely on one-off funding measures to balance its books, alongside cuts to both day-to-day and capital spending plans.