LABOUR have been urged to reverse their “damaging tax on jobs” following a key report which showed the hike in national insurance payments is hitting Scottish businesses hard.
The Fraser of Allander Institute released its latest quarterly business monitor on Thursday which showed that Scottish businesses are showing “tentative signs of recovery” following a difficult start to the year.
The report, based on a survey of more than 300 businesses across all 32 of Scotland’s local authorities, showed that while net balances remain in negative territory, there are signs of resilience among Scottish firms following a poor first quarter.
However, the report highlighted the continued impact of increased employer national insurance contributions (NICs), with more than 60% of Scottish firms having to adjust operations by cutting back on hiring, increasing prices, or reducing employee benefits.
Almost 40% of businesses said they expect further adjustments to come.
Following the report, the SNP have called for a better deal for Scottish [[business]]es, including a full review of damaging NIC hikes.
However, the party said that ultimately independence is the only long-term route to delivering stability, growth and prosperity for the people and businesses of Scotland.
Kenneth Gibson MSP echoed the party's calls as he said Scottish firms are being forced to “absorb the consequences” of the UK Government’s decisions.
He said: “Scotland’s [[business]]es are doing their best to recover, despite being held back by Westminster’s economic mismanagement - not least Labour’s decision to hike employer National Insurance Contributions.
“Scottish firms are being forced to absorb the consequences of a Labour government that has no regard for Scotland. Labour must listen to businesses and urgently reverse its tax on jobs.
Gibson added: “This report shows what the SNP has long been saying: businesses in Scotland are resilient, forward looking, and adaptable. But without the powers of independence we remain at the mercy of decisions taken at Westminster that do not reflect Scotland’s needs or ambitions.
“Only with independence can we build a fairer, more resilient economy that works for Scotland’s businesses and delivers economic stability, support for exporters, and a long term plan for sustainable growth."
The report also highlighted that almost a quarter of businesses expect moderate to strong economic growth in the Scottish economy over the next 12-months.
Meanwhile, nearly three quarters of businesses surveyed said they still expect growth to remain in the weak to very-weak territory.
The Fraser of Allander Institute said the recovery in the second quarter had “thus far failed to crystallise into durable improvements in overall business sentiment”, and noted firms are continuing to be affected by unpredictability around trade and tariffs.
Josh Hampson, knowledge exchange assistant at the Fraser of Allander Institute, said: “The ongoing uncertainty around trade continues to show up in the sharp decline in the export activity from what was already seen as a weak starting point in the first quarter of 2025.”
He added: “Economic policy and political uncertainty are uppermost in the minds of Scottish businesses, even more than traditional factors such as borrowing costs or staff availability.”
A HM Treasury spokesperson said: “UK business confidence is the highest in ten years according to a Lloyds Bank survey published only this week. Since the election, we have struck three major trade deals with the EU, US and India, more than a billion pounds has been invested to fix our national infrastructure and the Bank of England has cut interest rates four times.
“And because of the tax decisions we took at the Budget last year, we have been able to deliver on the priorities of the British people, including funding the record £50.9 billion settlement for Scotland to support public services including health, transport and education as we deliver on the Plan for Change.”
