‘Simply unsustainable’: The stark Easter message from Scotland’s business leaders

Scottish business leaders have warned that soaring costs are “simply unsustainable” with further company failures likely after a slump in confidence in recent months.

Releasing its latest quarterly economic indicator, the Scottish Chambers of Commerce (SCC), said businesses were facing flatlining demand, stalling investment and rising labour costs.

The report, which is conducted in partnership with the Fraser of Allander Institute, reveals that business confidence has declined across all sectors, compared to the same period last year. Labour costs are the leading pressure on operating expenses for companies, according to the findings, while rising bills for energy and raw materials continue to squeeze businesses in every industry.

Business leaders have warned that more firms may be forced to close for good.

Taxation is now the number one concern for Scottish firms, overtaking inflation, and all five sectors surveyed expect to raise prices in the next quarter.

Doug Smith, vice-president of the Scottish Chambers of Commerce, and chairman of its economic advisory group, said: “The cost of doing business is simply unsustainable. Employers are being punished for hiring through regressive tax hikes, the prospect of the administrative burden of the Employment Rights Act, and national insurance increases, resulting in an economic sedative when what we need is an economic stimulant.

“Scotland is losing out on major UK contracts and investment opportunities because we simply don’t have the trained workforce to deliver. Ministers must act now to overhaul the skills system, not with another review, but with real investment in people and training.”

The survey of almost 400 businesses found confidence evaporating across key sectors of the Scottish economy. Sharp drops in confidence were recorded for tourism, manufacturing and construction, compared to the same period a year earlier.

While the survey was conducted before the implementation of higher national insurance contributions for employers, firms were already changing their hiring patterns in anticipation, the SCC noted.

Liz Cameron, chief executive of the SCC, said: “Rising taxes, higher energy bills and skills shortages are creating a perfect storm. Margins are razor-thin. Recruitment and investment plans are on hold. Without immediate intervention, we will see more businesses cut back or close entirely.”

Meanwhile, a separate report today shows that Mother’s Day shopping gave Scottish retailers a modest sales boost in March. Figures from the Scottish Retail Consortium reveal that total sales north of the Border nudged up 0.3 per cent last month, compared with March 2024.

Easter and Holy Week were in March last year but fall in April in 2025, and SRC deputy head Ewan MacDonald-Russell described the new data as a “surprisingly strong performance” for this March.

Beauty products and gardening sales were particularly popular in Scotland last month, according to analysts.

MacDonald-Russell added: “Mother’s Day proved to be a boon for retailers with haircare gifts and beauty products selling well. Computing and gaming sales continued to perform well, lifted by pre-orders of the new Nintendo Switch 2.

“These figures will hearten retailers who need good trading to counterbalance the turbulent economic news, and the significant public policy costs businesses are grappling with.”

National insurance nightmare: Why Scottish businesses think 2025 can only get worse