11th October 2026
A new survey finds that businesses want reform of business rates, while concerns about costs and government policy continue to hold back confidence.
The Scottish Government has an opportunity to improve its relationship with businesses when it sets out its next Budget, according to a new report from the Fraser of Allander Institute at the University of Strathclyde.
Its latest Scottish Business Monitor, published on 6 October, surveyed 200 businesses across Scotland and found that reform of business rates was their leading priority ahead of the Budget.
A third of businesses, 34%, selected business rates as their main priority. Skills and training came next at 14%, followed by income tax at 12%.
The report also uncovered a worrying lack of confidence in the relationship between government and business. Some 69% of firms said the Scottish Government did not understand the business environment, while 71% felt it did not engage effectively with businesses when developing policy.
There are signs of improvement, with more businesses saying they know how to influence government decisions. But the overall message is that many companies still feel they are not being listened to.
Activity is improving, but confidence remains weak
There was some encouraging news. Business activity improved across all six indicators measured by the survey, and sales returned to positive territory for the first time since the second quarter of 2024.
However, businesses remain cautious about what comes next.
Almost all respondents, 99%, identified economic and business uncertainty as an important concern, while 93% pointed to political uncertainty.
Costs are still rising for many firms. More than eight in ten reported higher total costs during the quarter, and 86% expected their costs to increase over the following six months. Employee costs were the most frequently reported pressure, while energy was expected to be the main driver of future cost increases.
Three-quarters of businesses expected the Scottish economy to experience weak or very weak growth over the next year.
What does this mean for Caithness?
For businesses in Wick, Thurso and the wider Highlands, these findings are particularly relevant.
Local firms face many of the same pressures as businesses elsewhere, but distance, transport costs, recruitment difficulties and a smaller customer base can add to the challenge.
Business rates are an important part of that picture, particularly for shops, hospitality businesses and other firms operating from commercial premises. Reform could help, but the detail matters. Businesses need to know which changes will apply to them and whether any savings will be enough to make a practical difference.
There is also a wider question about economic development. Governments can announce strategies to encourage investment and growth, but businesses must have confidence that the policies, tax arrangements and support available will remain sufficiently clear and predictable for them to plan ahead.
The Fraser of Allander Institute is not suggesting that one Budget can solve every problem. Its message is that the Scottish Government should use the opportunity to address business priorities and improve dialogue with the private sector.
The test will be whether businesses see tangible changes, rather than simply hearing more promises.
For Caithness, where every new business and every sustainable local job matters, that distinction is important.
Source: Fraser of Allander Institute, Scottish Budget offers opportunity to back business ambition with action, 6 October 2026.
See https://fraserofallander.org/scottish-budget-offers-opportunity-to-back-business-ambition-with-action/