Scotland’s economy has seen the fastest boost in business services activity since 2024, as the economy continues to show signs of improvement, the latest Royal Bank of Scotland report shows.

Mid-market business confidence soars, with strong numbers in technology, media and telecommunications firms.

Scotland’s small and medium market sectors has seen positive growth since May, showing strength as it goes into the second half of 2025.

Employment in Scotland rose in May, and has since then stayed relatively stable, beating out the rest of the UK. The initial rise in jobs was led by the services industry.

Further, after a strong performance in June, confidence in the economy has reached its highest level in 2025, with next year’s outlook on opportunities positive.

A third of firms in the private sector predict an increase in output in the next 12 months, as opposed to only 10% projecting a reduction.

However, the manufacturing sector continues to face challenges – production continued to shrink in June, though at a lesser pace than in May. Consumer goods seemed to be more resilient than other aspects of the sector in the later end of the first half.

“While we continue to see a mixed picture for businesses in Scotland, it is encouraging to see some signs of momentum across the economy,” Paul Thwaite, chief executive of NatWest Group said.

“Firms remain resilient, with activity and confidence improving in many areas, although this varies by sector as well as individual circumstances.”

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Sebastian Burnside, RBS chief economist, said: “Following the challenging start to the year, Scotland’s economy hit a high point in June with private sector businesses reporting their strongest growth of the year so far.

“Business services and travel and tourism led the way, with mid-market firms showing renewed confidence in future growth.

“Scotland’s businesses report higher employment trends than other parts of the UK, with mid-market services businesses and technology, media and telecoms firms scoring especially highly.

“Whilst there has been some stabilisation, businesses are still facing a rapidly changing international environment and domestic pressures — as we can see with manufacturers who reported tougher business conditions in June, particularly amongst smaller firms.”