Scottish Chambers of Commerce Responds to UK Budget 2026

Summary

The UK Budget provides targeted support for industrial energy costs, access to investment and business growth, alongside new funding for projects in Scotland. However, it falls short of providing the immediate cost relief sought by businesses across much of the economy.

The British Industrial Competitiveness Scheme (BICS) should reduce electricity costs for eligible manufacturers, while higher statutory wage rates and the continued burden of Employer National Insurance Contributions will add to pressure on labour-intensive sectors. The increase in alcohol duty and continued uncertainty over the Acorn carbon capture project are further concerns for Scotland's economy.

The UK Government has also announced additional business-rates support for retail, hospitality and leisure properties in England. Scotland will receive £600 million in additional funding through the Barnett formula over the Budget period, with decisions on equivalent rates relief resting with the Scottish Government.

Overall, the Budget takes useful steps towards supporting investment and competitiveness, but leaves significant pressures on business costs unresolved.

Key announcements for Chamber Network

• Employment costs: The National Living Wage will increase by 3.9% to £13.21 per hour from April 2027, with corresponding increases for younger workers and apprentices. Employer National Insurance Contributions remain unchanged, with no additional relief for businesses.
• Business energy: Funding has been confirmed for the British Industrial Competitiveness Scheme, which will reduce electricity bills by up to 25% for more than 10,000 eligible manufacturers from April 2027, including a backdated payment. The Government will also cancel the planned Gas Shipper Obligation and introduce new controls on energy policy costs.
• Business rates: Retail, hospitality and leisure businesses in England will benefit from expanded Small Business Rates Relief and a two-year real-terms freeze on rates bills. Decisions on equivalent support in Scotland come down to the Scottish Government, which will receive £600m in Barnett Consequentials over the spending review period.
• North Sea energy and carbon capture: The Government has committed £2 billion to a new Energy Wealth Fund and confirmed legislation for a successor tax regime when the Energy Profits Levy ends. However, the Acorn carbon capture project has not secured a firm grant-funding commitment, with alternative financing options being explored.
• Fuel duty: The existing 5p-per-litre fuel duty cut will be extended until July 2027, alongside continued temporary relief for red diesel users. This will provide some relief for transport, logistics, agriculture and other fuel-intensive businesses.
• Scotch whisky and hospitality: Alcohol duty will rise in line with RPI from February 2027, increasing costs for Scotch whisky and other drinks producers. Small Producer Relief will become more generous for eligible lower-strength products, but the Budget does not reduce spirits duty or hospitality VAT.
• Business investment: The Government has announced an additional £20.4 billion in capital for the National Wealth Fund and British Business Bank, alongside changes to capital allowances. Targeted investments in Scotland include £18 million for an Advanced Chip Design Academy, £6 million for Glasgow's Scottish Event Campus (subject to a business case) and £20 million in UK Government funding, alongside support from the Scottish Government, for two Defence Technical Excellence Colleges.

Commentary

The Budget makes progress against some of Scottish Chambers of Commerce’s 10-point plan, particularly on exports, investment and regional growth. Targeted support for industrial electricity costs is welcome, while funding for advanced chip design, defence skills and the expansion of Glasgow’s Scottish Event Campus should create opportunities for Scottish businesses. The planned export finance scheme, offering guarantees of up to 80% for eligible loans, should also improve access to working capital for smaller exporters.

There is movement on regional investment, although the main fiscal devolution measures apply to England. Income-tax assignment and a share of business-rates revenue will give English mayoral authorities more influence over growth. This strengthens the case for a wider discussion about regional economic powers in Scotland, with business involved in shaping local priorities.

Several of SCC’s main concerns remain. Employer National Insurance Contributions have not been reduced, while the 3.9% rise in statutory wage rates will increase employment costs. Alcohol duty will increase despite calls for relief for Scotch whisky producers. Continued uncertainty over the Acorn carbon capture project also raises concerns for investment in the North East.

The Chancellor presented this as a Budget designed to give households and businesses breathing space. While there are welcome measures to support investment and growth, the limited action on the everyday costs that businesses continue to identify as holding back investment may leave many firms questioning where that breathing space will come from.

SCC reaction

Charandeep Singh BEM, Chief Executive of Scottish Chambers of Commerce, said: “This Budget will not provide the reassurance our members were seeking at a time when employers across Scotland are crying out for action to alleviate the high cost of doing business.

“Employer National Insurance contributions remain at 15%, Scotch whisky distillers face another duty increase, there is no early end to the Energy Profits Levy, and the Acorn Carbon Capture and Storage project in the north-east has been left with no confirmed funding commitment, casting huge doubt over a project which could create 15,000 jobs.

"On these major pressures, and more, this Budget is disappointing.

“However, Scottish Chambers of Commerce does welcome measures to reduce electricity costs for manufacturers, alongside expanded access to UK Export Finance, a key request in our Budget submission to the Chancellor. 

"New investment in Edinburgh’s technology sector and Glasgow’s SEC, alongside support for defence skills colleges, is also positive.

“Scotland’s economy has enormous potential, but our members need the right conditions to make the most of it. We will continue to make the case to the UK Government for action to reduce the high costs that are stifling investment and economic growth.

“Attention will now turn to the Scottish Government budget, where it is more vital than ever that we see urgent action on the major devolved issues stifling Scotland’s businesses, such as non-domestic rates.”

Sarah Medcraf, Chief Executive of Moray Chamber of Commerce, said:

“Businesses in Moray will welcome measures that support investment, manufacturing and energy costs, but for many the immediate challenge remains the cost of simply doing business.

“The continued pressure from employment costs will be particularly difficult for sectors such as hospitality, tourism and retail, while the increase in alcohol duty is disappointing for a region where Scotch whisky is such an important part of our economy and supply chain.

“There are positives, including the extension of the fuel duty cut, which matters greatly to rural businesses where transport costs are unavoidable. However, what businesses need most is confidence and the headroom to invest, recruit and grow.

“With £600 million in additional funding coming to Scotland through the Barnett formula, we now need the Scottish Government to recognise the pressures facing businesses here and ensure that business rates and wider support for growth are firmly on the agenda.”