Small Business Index Scotland Q3 2025
In Q3 2025, the Small Business Index for Scotland (SBI) declined by 22.1 points to -57.8. This reflects a more pessimistic outlook over future performance for Scottish small businesses, as a significantly larger proportion anticipate performance worsening than those anticipating improvement.
As in Q2, Scotland’s decline was one of the steepest among all regions in the UK, with only the East Midlands and West Midlands experiencing a greater drop in the SBI in Q3. The UK SBI fell by 14.1 points in the same time frame, with all regions firmly in negative territory and only London showing improvement.
The net balance of Scottish small businesses reporting revenue growth in Q3 fell to -43.7%, its second lowest value in the history of the SBI. This significant negativity was mirrored by the UK-wide reading, which showed a record low in Q3. Demand has been stifled by rising uncertainty and stagnating earnings growth, exerting downward pressure on revenues. Scottish small businesses are anticipating that these conditions will persist, as the net balance of small businesses expecting revenue growth in Q4 remains below the UK average at -37.7%.
89.4% of small businesses in Scotland reported rising input costs in Q3. By contrast, only 5.6% reported costs decreasing, giving a net balance of 83.8%, up from 83.1% in Q2. Rising costs, combined with the aforementioned weak demand, are putting pressure on Scottish small businesses on all fronts.
Labour costs were the most frequently cited cost pressure for Scottish small businesses in Q3, reported by 57.0% of respondents. This was closely followed by taxation, cited by 56.3% of respondents. These pressures reflect the raised employer National Insurance contributions introduced this fiscal year. While they are broadly in line with the UK-wide figures, Scotland’s percentage of small businesses citing taxation as a major cost pressure was lower than the UK-wide figure of 62.0%. Utilities and inputs were also both cited by over 45% of respondents.