Scottish Engineering CEO Paul Sheerin said on Monday that “the path to recovery hinted at in last quarter’s survey has continued, albeit in slower and smaller steps than any of us would like to see.”

In his Q3 2025 quarterly report, Sheerin said it was perhaps no surprise that a return to a more positive business outlook is progressing at this slower rate “given the depth of impact that last October’s budget changes to employment taxation had on the cost of doing business.”

“The steady trickle of companies approaching or entering administration who have signalled these changes – often alongside high industrial energy costs – as significant in this outcome has been a painful reminder of their impact,” said Sheerin.

“A marginal return to positive optimism is our best glimmer that better times for business lie ahead, supported by a significant step in forward forecast for our large and medium sized companies.

“The last few quarters have underlined however that forecasts are just that – a best estimate for the future but not reality until the orders arrive.

“Looking back to prior quarters this year, the gap between more favourable forecasts and negative optimism looks like a mismatch we should have questioned more, and in that respect a more upbeat forecast alongside positive optimism and an intent to increase staffing feels like a more joined up source of hope.

Last quarter we voiced our concern for planned investment in training, with small companies dipping negative in their intent to train for the first time in four and a half years.

“Although that number was ‘only’ a net -1%, we saw this as sharp change given that the average intent to train for this group since January 2021 has been above +26%. Whilst at times it may not feel like it, history tells us that downcycles always – eventually – turn to upcycles, and when we recently analysed the first quarter of this century, the split was a decent two thirds positive to one third negative.

“In the context of training investment, this quarter’s decent uptick is both welcome and essential. Downcycles mask the extent of skills shortages and given many areas of industry are already constrained by a lack of available skills, the inevitable pick up when it comes will focus our attention once again on how acute that problem is …”