Scottish businesses are reporting their most positive assessment of the economy since June 2023, according to the latest quarterly Understanding Business survey of more than 500 Scottish firms.

The Understanding Business survey is designed and conducted by research consultancy Diffley Partnership and strategic communications firm Charlotte Street Partners.

In the latest quarterly survey, 35% of Scottish companies believe economic conditions are better now than they were a year ago, an uptick of 11 points since the last survey in June and the highest level recorded since the tracker began in June 2023.

About 43% of firms believe economic conditions have worsened in the last year, while 22% believe they are about the same.

About 38% expect economic headwinds to ease in a year’s time, also an 11-point increase since June’s survey. Around 25% believe they will be about the same, while 37% anticipate worsening headwinds.

Optimism also extends to individual business performance, with 46% expecting their profitability to increase over the next 12 months (+8 from June) and 45% expecting their turnover to increase (+5 from June).

The latest survey was conducted during September 2026, soon after John Swinney secured his first personal mandate as Scottish first minister and a new UK government was formed under Andy Burnham’s leadership.

While both the SNP and Labour are incumbents, Scottish businesses seem to be encouraged by the action taken by the two governments to address their concerns.

When asked about politicians’ interest in Scottish businesses, 56% feel the Scottish Government is concerned with industry needs (+6 from June), while 43% say the same of the UK Government (+8 from June). The proportion that disagree stands at 28% for the Scottish Government and 36% for the UK government.

There has also been an increase in the proportion of those who believe governments are taking action to address business concerns.

The Scottish Government is viewed more favourably, with 50% agreeing it is taking action (+10 from June), compared to 35% who believe the same of the UK government (+8 from June). The proportion that disagree stands at 32% for the Scottish Government and 42% for the UK government.

When asked to evaluate the new Scottish Government’s first 100 days in power, 56% of business leaders are confident that ministers are focused on business growth in Scotland. However 39% reported that they were not confident that their actions will support business growth in Scotland.

There is strong support too among Scottish businesses for some of Andy Burnham’s early policy announcements, including his move to cut business rates for pubs, clubs and live music venues, with 77% saying the 20% reduction should be adopted in Scotland.

Businesses are also supportive of further devolution of decision-making within Scotland, with 58% agreeing that establishing metro mayors would promote economic growth.

Scott Edgar, head of analysis and insights at Diffley Partnership, said: “This wave of Understanding Business points to a notable improvement in sentiment among Scottish businesses.

“While firms continue to identify significant challenges around costs, taxation and economic uncertainty, they are more likely than they were earlier this year to say that economic conditions are improving rather than deteriorating.

“The findings also point to more positive perceptions of both the Scottish and UK governments. Taken together, the results suggest businesses remain alert to the challenges they face but are taking a more positive outlook than they were just a few months ago.”

Malcolm Robertson, founding partner at Charlotte Street Partners, said: “These numbers suggest that businesses are encouraged by what are essentially two new governments.

“John Swinney has talked much more about economic growth, and Andy Burnham is indicating that he will take on some of the big challenges facing the country.

“However, politicians – like the rest of us – will be judged on whether these early signs of support and action are converted into good policy and the economic growth that is the key to bringing down the cost of living for people up and down the country.”