Business News Round Up (17/08/2026)
Scottish margins squeezed by wage growth and weak pricing power, but financial sector turndown slows
Scottish margins are being squeezed as rapid growth in employment and wages clashes with weakening pricing power, according to the latest Royal Bank of Scotland Growth Tracker. Scotland was the only nation in the UK outside of Northern Ireland to record payroll growth in July with employment rising at its fastest rate since September 2024 – reaching a nearly two-year high. The report found that job growth was driven almost entirely by service providers, who cited preparations for future projects, while goods producers saw a marked decline in payrolls. But many businesses reported operating expenses remained high, driven by payroll overhead growing significantly. At the same time, companies faced 22 consecutive months of falling new orders and weak client demand. Output charge inflation slowed for the third straight month to its lowest since February, giving Scotland the weakest pricing power anywhere in the UK.
Rising energy prices likely to push inflation higher
The impact of the Iran War on household bills is expected to show in a rise in July’s inflation figure. Economists predict the Consumer Prices Index to come in at 2.9%, up from 2.6% in June. The increase is likely to be driven by higher domestic energy bills following the recent 13% jump in Ofgem’s energy price cap, according to forecasters. Investec economist Ellie Henderson said the energy price cap rise alone will add 0.5 percentage points to inflation for July. The cap, which reset on 1 July, initially sheltered consumers from the surge in energy prices following the outbreak of the Middle East conflict. Despite recent government measures to reduce the cost of living, such as discounted leisure activities this summer and the cut in VAT on electricity bills from October, Deutsche Bank expects UK inflation to peak at around 3% this year, before easing to 2.4% next year.
Businesses remain confident amid shift to ‘measured growth’
Small and mid-sized enterprises are upbeat on their future – with three-in-five expecting revenue over 5% for the coming 12 months. According to the inaugural Nexia Global Growth Insights Survey 2026, mid-market companies remain ambitious despite economic and geopolitical uncertainty, but are increasingly prioritising sustainable, achievable growth over high-risk expansion. The findings come as economic forecasts suggest the UK is on a path of steady but modest growth. According to new IMF estimates, GDP growth could hit 1.0% in 2026, rising to 1.3% in 2027 – while the more cautious OECD forecasts growth of 0.9% in 2026 and 1.1% in 2027, having recently adjusted its expectations for next year. This is part of a trend which spans the continent – and is powering renewed confidence for organisations of all sizes. European mid-sized businesses in particular more likely to expand, than those on any other continent, according to researchers from consulting network Nexia.
https://www.consultancy.uk/news/amp/45356/businesses-remain-confident-amid-shift-to-measured-growth
Start-ups ‘losing faith’ in government as tech champion, report says
UK start-ups are “losing faith” in the government as a technology champion after successive efforts to buy more from domestic businesses have had little effect, according to a new report from the Startup Coalition, which says Andy Burnham’s “Buy British” push must address fundamental problems in the procurement process. “For British start-ups and scale-ups, this really is the last-chance saloon after successive administrations have delivered warm words but little real action. The result is an ecosystem increasingly losing faith in the UK government as a buyer and champion.” Successive governments over the past decade have struggled to increase the share of government spending that goes to small businesses. In 2015 David Cameron set a target for one third of central government procurement to go to SMEs by 2020. The latest estimates from Tussell and the British Chambers of Commerce suggest that 21% went to SMEs last year, a six-year high.
https://bmmagazine.co.uk/news/startups-losing-faith-government-procurement