Over two thirds (68%) of private business owners in Scotland are confident in delivering growth in the second half of 2026, according to KPMG.

At the start of 2026, KPMG’s annual Private Enterprise Barometer surveyed 1,500 privately owned businesses across the UK, including 119 in Scotland, spanning sectors such as professional services, financial services, technology, industrial manufacturing and retail, to understand their growth ambitions and priorities for the year ahead.

Six months on, following a challenging period for the UK and global economy amid instability in global energy markets, persistent inflation and trade restrictions, KPMG returned to these same businesses to understand how changing economic conditions have influenced their outlook.

At the beginning of the year, 87% of private businesses in Scotland expressed confidence in their growth prospects for the next 12 months. By the mid-year mark, this sentiment has fallen, with confidence levels now at 68%, reflecting a change in expectations for growth during the remainder of the year.

Investment priorities

Technology continued to dominate as a leading investment priority for Scottish-based businesses, with nearly half (44%) identifying areas such as artificial intelligence (AI), cyber security and broader digital transformation as key focuses. And while this is 22-percentage points below the UK average, it represents a six-percentage point increase compared with the beginning of the year.

Diversification also remains firmly on the agenda, with over half (52%) of businesses across the country looking to expand their service offerings and broaden their client base. This does, however, represent a decrease from 63% at the start of 2026.

Of businesses considering how to fund their growth plans, nearly a third (30%) of businesses continue to say they are open to private equity investment. Notably, however, nearly six in 10 (59%) Scottish businesses are looking to focus on driving investment through their own balance sheets, above the UK average of 57% and just a two-point decrease from the beginning of the year.

Looking ahead

Amid a dip in confidence, businesses remain alert to the challenges ahead. More than half (55%) of businesses identified inflation and ongoing cost pressures, and global disruption impacting UK supply chains and trade as the two biggest short-term risks facing their organisations.

At the same time, firms are looking to policymakers to help strengthen long-term resilience. When asked about the Autumn Budget, over a third (37%) of Scottish businesses would like to see growth focused investment and industrial strategy, and business profitability and competitiveness prioritised by the incoming Chancellor.

Looking further ahead, the wider economic picture remains front of mind, with half (50%) of respondents pointing to UK economic outlook and productivity growth as the biggest external factor shaping decisions around investment, growth and exit planning.

“Scotland’s private businesses are proving resilient and are taking a pragmatic approach to the current economic environment. While confidence has eased slightly as firms continue to navigate inflation and global uncertainty, the ambition to grow remains clear,” Vishal Chopra, Scotland Senior Partner at KPMG UK, said.

“What’s particularly striking is that more businesses are choosing to back themselves. Rather than looking outside for funding, many are relying on their own balance sheets to invest and grow, giving them greater control at a time when the economic outlook remains uncertain.

“Now that the Scottish Parliament elections have passed, businesses will be looking for that renewed political focus to translate into greater economic certainty with a clear commitment to creating the conditions for investment and giving businesses the confidence to plan for long-term growth.”

Recommended reading

• Scottish Business Confidence Rebounds Amid Tech Investment Push
• Scottish Business Confidence Remains Resilient Despite June Dip
• Scottish Business Confidence Rises to 50%
• Business Confidence In Scotland Down in April
• Scottish Business Confidence Holds in March

The UK-wide outlook

UK-wide, private businesses outlined plans to continue to invest in technology and skills as part of efforts to boost growth after KPMG UK’s mid-year Private Enterprise Barometer revealed a dip in growth confidence due to ongoing UK and global uncertainty.

The survey found that 80% of business owners were confident in their firm’s growth prospects, down from 87% when asked earlier this year.

Overall, technology, including AI, remains the main investment priority signalling this is now shifting towards practical implementation of tech like AI to improve productivity, efficiency, and growth.

Looking ahead to the Autumn Budget, private businesses said the areas most in need of attention to help bolster growth are the faster adoption of new technology and boosting digital capability, growth-focused investment and the continued focus on a renewed industrial strategy.

Euan West, Head of KPMG Private Enterprise in the UK and EMA, said: “2026 has continued to present private businesses with a challenging operating environment, shaped by uncertainty both at home and abroad.

“Against that backdrop, it is encouraging that eight in 10 business leaders remain confident about their growth prospects. While confidence has eased since the end of last year, the overall picture remains one of resilience and determination.

“What stands out most is how private businesses are responding. Rather than pulling back, they are investing in skills, technology and the capabilities that will help them remain competitive and unlock future growth.

“These results highlight a business community that is realistic about the challenges ahead but confident in its ability to overcome them.

“Private enterprise leaders are entrepreneurial, action-oriented and focused on what they can control. They are not waiting for conditions to improve; they are getting on with the job of creating growth.”