Seven ways the Scottish budget can kickstart growth in 2026

On January 13, finance secretary Shona Robison will reveal the Scottish budget for 2026–27. Prosper has written to the Scottish Government on behalf of our members with proposals for how this fiscal statement before May’s Holyrood election can get the country’s economy growing again.

The Scottish economy has its challenges. The global financial crisis, austerity, Brexit, covid, the war in Ukraine and now US tariffs have all taken their toll.

A recent survey of 200 firms – including many of our members – in the Fraser of Allander Institute’s latest Scottish Business Monitor found that 81% of businesses expect weak or very weak growth in 2026. The situation facing job seekers is particularly challenging, with more businesses reporting declining employment compared with those taking on more staff.

That’s why Prosper is calling on Ms Robison to make this a Scottish budget for growth and opportunities. We believe she could do so in the following seven ways.

Restore confidence to consumers and businesses

Uncertainty was the dominant theme in the global economy in 2025. Ms Robison would be well advised to use this budget to provide reassurance and relief to households and businesses.

The Scottish Government should avoid further cost increases for businesses and alleviate existing ones where possible. There is a pressing need to mitigate the large rise in rateable values proposed for many businesses in the 2026 non‑domestic rates revaluation. Some are facing percentage rises in triple figures. Prosper has co‑signed a letter along with major business representative organisations, recommending practical solutions to address business concerns while ensuring that there is no negative impact on funding for council services.

Commit to multi-year public spending budgets

The budget needs to make progress on the Scottish Government’s public sector reform strategy. Allocating budgets over multiple years, rather than annually, would help public, third‑sector and private‑sector organisations to plan and spend money more effectively. Short‑term project funding is both inefficient and ineffective in tackling complex social problems, locking vulnerable and marginalised communities out of economic growth and opportunity.

There are clear benefits from focusing on prevention and unlocking the potential of external bodies, such as social enterprises, as delivery partners for government policy. It is essential that all parts of the public sector are committed to growth and opportunity. Only then will substantial progress be possible on the first minister’s strategic priorities.

Help workers by prioritising skills and training

If we aren’t increasing opportunities for people in every part of our country, we won’t be able to grow our economy. Helping workers with skills development and training should be at the heart of this budget. The Scottish Government should end the significant real‑terms reductions in funding for colleges and universities seen in recent years and begin a recovery programme.

Cuts to student places are having a material impact on Scotland’s growth ambitions. A recent survey also found that firms expect a 58 per cent increase in engineering roles like fabricators over the next two years. Colleges are training around 2,000 welding and fabrication students every year but, with additional funding, this could be increased to more than 5,000.

It’s not that the talent and jobs don’t exist in Scotland – it’s that our colleges don’t have the funding to train enough people to meet demand. This is a direct consequence of investment in our colleges falling by 20% since 2021/22.

Scotland’s growth industries can deliver – so the government needs to get behind them

Scotland is internationally competitive in many established sectors, including financial services, energy, food and drink, professional services, education and the creative industries, as well as emerging industries like clean power, tech and life sciences.

The Scottish Government should back the growth plans for these sectors through additional investment in the budget for economic development (which currently represents only 1.2 per cent of total spend) to support improvements in productivity, entrepreneurship, innovation and exporting in Scottish companies, including small and medium‑sized enterprises (SMEs).

Fund a pragmatic transition to clean power

Scotland has a once‑in‑a‑generation opportunity to clean up its economy and improve living standards through the transition to electricity generated by clean sources like wind, hydrogen and solar.

The Scottish Government should use this budget to back the Scottish‑based industries that are working on the mission to decarbonise electricity generation by 2030. This must come alongside long‑term commitments to invest in training programmes for regions and industrial locations most affected by the transition, including the North East, Grangemouth and Mossmorran.

Deliver infrastructure as a route to growth

Infrastructure connects growth and opportunity by enabling people to access jobs, linking businesses to customers and getting goods to market.

The Scottish Government should use the draft infrastructure strategy and infrastructure delivery pipeline – due to be published alongside the budget and spending review – to deliver infrastructure that unlocks business investment and growth across all parts of Scotland. For example, the funding previously cut for the Affordable Housing Supply Programme should be fully reinstated in real terms to £955 million, building on the welcome commitment to multi‑year investment in the action plan for the housing emergency.

Strengthen place-based economic partnerships

Prosper welcomed the first minister’s announcement in November of progress on the Scottish regional devolution agenda by placing regional economic partnerships on a statutory footing. We hope to see this reflected in the budget, including confirmation of the capacity funding required to support the development of regional economic partnerships and place‑based plans that join up public and private investment.

Conclusion

This could be a Scottish budget that kickstarts growth everyone can benefit from: giving businesses certainty, funding skills, backing competitive sectors, and delivering the clean power, infrastructure and partnerships that unlock investment across every region.