Business News Round Up (02/02/2026)
Businesses anticipate uneasy start to 2026
Business confidence in Scotland remains weak, according to the Fraser of Allander Institute’s Scottish Business Monitor with firms pointing to cost pressures, subdued investment and little expectation of short-term relief. All six headline indicators in the quarterly survey, which tracks business sentiment from over 250 businesses across all 32 Scottish local authorities, have remained in negative territory for a fifth consecutive quarter. This degree of persistence, rarely seen in the series dating from 1998, suggests that pessimism is becoming entrenched rather than transitory. The report, covering Q4 of 2025, finds labour market conditions continue to soften. Over the final three months of 2025, more businesses reported a decline in employment level, aligning with official data showing nearly 15,000 fewer employees on Scottish business payrolls in November 2025 compared with a year earlier. Firms also reported weaker turnover during the period, including through the traditionally strong ‘golden quarter’.
https://fraserofallander.org/businesses-anticipate-uneasy-start-to-2026
UK unemployment set to hit five-year high as tax rises begin to bite, EY warns
UK unemployment is expected to rise to its highest level in five years in 2026 as previously announced tax increases begin to weigh on growth and hiring, according to new forecasts from the EY Item Club. The forecasters warned that joblessness could peak at 5.2 per cent in the first half of this year, up from the current 5.1 per cent and the highest level since January 2021, as modest economic growth is constrained by tighter fiscal policy and global uncertainty. The EY Item Club said tax rises announced by Rachel Reeves in her first Budget are set to have a more pronounced impact this year, dampening both consumer spending and business investment. Employers were already hit by a £25 billion increase in national insurance contributions last spring, a move that business groups have warned would curb hiring.
https://bmmagazine.co.uk/news/uk-unemployment-five-year-high-ey-item-club-2026
British factories cut US exports as Trump tariff uncertainty bites
British manufacturers are scaling back exports to the United States as uncertainty caused by President Donald Trump’s shifting tariff policies disrupt trade and supply chains, according to new industry research. A joint study by Make UK and DHL Express found that 20% of UK factories have already stopped or reduced exports to the US in response to tariff uncertainty. A further 16% said they plan to reduce their reliance on the American market, meaning more than a third of manufacturers now view US tariffs as having a negative impact on their business. The report also found that many British factories rushed shipments into the US in early 2025 to beat a potential rise in import levies, highlighting the stop-start nature of trade policy over the past year. Trump has imposed a blanket 10% tariff on UK imports, one of the lowest rates applied to any country.
https://bmmagazine.co.uk/news/british-factories-cut-us-exports-trump-tariffs
Demand for commercial property in Scotland edges up as surveyors appear cautiously optimistic for 2026
Demand for commercial property in Scotland edged up in the last quarter of 2025 according to the latest Royal Institution of Chartered Surveyors (RICS) commercial property monitor, and, despite clear challenges remaining, surveyors appear cautiously optimistic for both rents and capital values this year. A net balance of 12% of Scottish respondents reported a rise in occupier demand for commercial property in Q4. Looking at the subsectors, a net balance of 9% of respondents reported a rise in demand for office space, whilst a net balance of 39% of Scottish respondents reported an uptick in demand for industrial space. However, a net balance of -12% of surveyors reported a fall in demand for retail space (though this is considerably better than the long-term average over the past 10 years). In terms of capital values, these are expected to rise overall during the next three months.