Scottish Budget 2024/25: business leaders give lukewarm reaction to Holyrood's latest economic roadmap

Influential leaders of key Scottish trade bodies give a mixed reaction to the Scottish Budget.

The freshly unveiled Scottish Budget for 2024 to 2025 has received a lukewarm response overall from business leaders, with one major trade body blasting it as “bleak” for the Scottish economy, and many stating that higher taxation for top earners will stifle growth, although there was some welcoming of freezing business rates.

Finance Secretary Shona Robison said her first-ever Budget comes amid “tough times”, and aims to support a growing, sustainable, and fair economy. Measures affecting firms include introducing a rate of 45 per cent income tax for those earning between £75,000 and £125,140 a year, and freezing business rates for premises valued under £51,000. Robison failed to replicate business rates relief pledged south of the Border, but said doing so “would have meant that we could not provide our NHS, schools, or emergency services with the funding that they require”.

Scottish Chambers of Commerce boss Dr Liz Cameron deemed the Budget “bleak”, adding: "We wanted to see a Scottish Government Budget that prioritised investment and business support. Instead, many sectors in the business community will feel neglected and disappointed. We recognise that [this] Budget was made under significant strain on the public finances, but [these] choices will leave many questioning the future outlook of the economy.”

'This is a budget which leaves no stone unturned as we prioritise what really matters,' said Robison. Picture: Andrew Milligan/PA Wire.

Cameron also said the introduction of the new tax band is a “blow to Scotland’s attractiveness, and places the personal tax system at a further competitive disadvantage compared to the rest of the UK”. Such concerns were shared by Scottish Financial Enterprise chief Sandy Begbie. He said the trade body, which recently said it wants to help “unleash” greater potential in the key sector, believes new tax measures “make our shared ambition of delivering growth more difficult, taking money out of the real economy, putting Scotland at a competitive disadvantage, and stifling future revenues” – [this] Budget is also likely to inhibit our ability to create jobs and attract and retain the talent our economy and society needs.”

Furthermore, David Ovens, joint MD of Edinburgh-based investment syndicate Archangels that looks to catalyse high-potential Scottish life sciences and tech firms, said: “Scotland already has a narrow tax base – only 33,000 pay the top tax rate and 40 per cent pay no income tax. Repeatedly raising taxes on this limited population risks driving away top earners on whom the system relies.”

The Budget, which follows the UK’s Autumn Statement revealed last month, “was always going to be difficult, given [Scotland’s] current financial situation”, according to Catherine McWilliam, nations director – Scotland, at the Institute of Directors Scotland, who views it as a “mixed bag for business leaders” amid low confidence among the private sector. Two recent bellwether surveys indicated a muted outlook for companies. McWilliam added: “However, we welcome the Finance Secretary’s decision to freeze business rates. This will provide some breathing room for organisations as they work to deliver more sustainable economic growth for the country.”

Looking ahead, a joint statement from the Scottish Tourism Alliance, UKHospitality Scotland, the Scottish Licensed Trade Association and the Scottish Beer and Pub Association, said: “The Scottish Government must now work closely with businesses, as promised in the Budget announcement, to bring forward a clear strategy for economic recovery and growth.”