Ross Stupart

However, growth looks more challenging moving forward, with inflation set to hit 4% and wage growth slowing. There’s also the added risk that speculation around Autumn Budget tax rises could depress confidence further.

Ross Stupart, regional managing partner for Scotland and Northern Ireland at RSM UK, looks at:

• Scotland’s job market feeling the squeeze, with hospitality and leisure hit hardest;
• A budget storm brewing amid expected tax hikes and spending cuts expected across the UK and Scotland;
• Scotland’s property tax boom as LBTT revenues soar; and
• Tariff troubles and sluggish demand for Scotland’s whisky distillers.

Mr Stupart said: “A weakening labour market is affecting availability of jobs and pay growth in some sectors more than others. Following a double whammy of employment cost rises earlier in the year, hospitality and leisure businesses are feeling a large part of the pinch, which are key economic contributors to large parts of Scotland, particularly during seasonal peaks.

“More positively, commitments outlined in the Industrial Strategy to benefit key industries for Scotland like ship building and defence technology were very welcome, however this has been slightly tempered by last week’s announcements of job cuts at some of Scotland’s ship building sites. This may simply be about repositioning the workforce to make it fit for purpose in the long term.”

He continued: “Public finances are in an unsustainable position and therefore tax rises plus spending cuts are inevitable in the upcoming Autumn Budget.

“Tax policy originating from the Scottish and UK governments are far from aligned and the likely need to raise funds via an array of tax rises is expected to lead to further conflict between UK and Scottish Government policy, particularly if such tax rises hit low to middle income households.

“Spending cuts will likely affect the block grant received by the Scottish Government which will put its budget under further strain and potentially push Holyrood into making big decisions on devolved taxes and their own spending to balance the books.

“On the flipside, recent figures show that Revenue Scotland has raised a record amount of Land and Buildings Transaction Tax (LBTT). The data shows that more property purchases are falling in scope of LBTT, much of the LBTT revenue is derived in a small number of key geographies, and a significant proportion of the revenues are derived from second home purchases. If consumer confidence takes a dip post-budget, maintaining the current level of LBTT income may be a challenge.”

Mr Stupart concluded: “Finally, lobbying by Scottish and UK government representatives for easing of US tariffs on Scotch whisky has so far appeared not to bear fruit, despite the US being the largest key market for Scottish whisky, accounting for £971m of exports in 2024.

“While the 10% tariff on Scotch whisky is lower than that imposed on Irish distillers, it still has a noticeable impact. Therefore, the drag on consumer demand in the US for Scotch whisky products may continue which will continue to put strain on an industry that is a key economic contributor in Scotland.”