Reflections on the Scottish Budget 2026-27
Having reviewed last week’s Scottish Budget 2026-27, our overall conclusion is that, much like the UK 2025 Autumn Budget, it offers little radical support for Framework’s clients or the wider Scottish business community. This reflects to some extent the limited fiscal headroom available to both the Scottish Cabinet Secretary for Finance and the UK Chancellor.
Economic context
Scotland faces a challenging economic environment, with modest GDP growth forecast over the next few years (around 1.3% in 2025–26 and 2026–27): operational costs continue to rise, revenues are sluggish for many businesses, and inflationary pressures persist. While both the Scottish and UK Budgets sought to provide some stability, there is minimal stimulus or targeted relief for the pressures businesses have been navigating for some time. Margins are therefore likely to remain tight for many organisations in the near term.
Key recommendations for Scottish businesses
In this environment, businesses should focus on resilience, discipline, and evidence-based growth:
Strengthen operational resilience: Build sufficient capacity and flexibility to act quickly and seize opportunities when they arise. Well-prepared, agile organisations will be best placed to succeed.
Maintain cash flow discipline: Proactively manage cash flow, forecast realistically, and maintain clear visibility of the organisation’s financial position.
Prioritise resources: Clearly communicate internally where capital, time, and effort should - and should not - be deployed, ensuring close alignment of financial and people resources with strategic goals.
Invest selectively in growth: Focus on growth initiatives that strengthen the core business, using clear, robust financial data and market evidence to guide investment decisions.
Sector highlights
Sports and physical activity: We welcome the £40 million funding package to expand access to sport and physical activity, supporting organisations’ operational costs, club development, and delivery of community activity programmes.
Culture and creative industries: The £34 million uplift to the culture budget, including a £20 million increase in Creative Scotland’s core funding, provides meaningful government support for the culture sector and creative industries. While further increases are needed to reach the often advocated 1% of the total budget, this represents a positive step in the right direction.
Tourism and major events: Funding rises by £3.2 million (5.5%) to £61.8 million, with most of the increase for major events, providing certainty for large, international events such as the Commonwealth Games, golf tournaments, Tour de France Grand Depart, and preparations for EURO 2028.
Retail, hospitality, and leisure: While these sectors have less to celebrate, smaller operators will benefit from a modest reduction in their Non-Domestic Rates (15% relief for premises with a rateable value up to £100,000, capped at £110,000 per business per year). Larger businesses with higher rateable values and significant operational costs - including energy and staffing - will see little substantive relief. Many businesses in these sectors are right to feel that neither the Scottish nor UK Budget addresses their underlying cost pressures.
Other sectors: The Budget provides limited additional support for sectors such as finance, tech, and energy. Businesses in these areas may need to continue relying on operational efficiency and strategic investment to navigate ongoing challenges.
Conclusion
While the Scottish Budget offers some sector-specific support, it does little to alleviate broader cost pressures and business challenges. Based on our experience, the businesses most likely to succeed, irrespective of sector, will be those that strengthen operations, maintain rigorous cash flow management, prioritise resource allocation, and invest selectively based on clear evidence.
If you would like a tailored discussion on how the recent UK and Scottish Budgets affect your business or sector, please get in touch.
