Scottish economic bulletin: June 2026

Business Concerns

• The weakness in new orders that businesses have reported at the start of 2026, continues to be reflected in businesses main concerns although it has naturally been recently accompanied by an increase in concern regarding inflation and energy prices.
• In the latest BICS survey in May, falling demand remained the most reported main concern by businesses (12%), albeit the share of businesses reporting this as a main concern has fallen compared to in 2025.
• Since the start of the year, an increasing share of businesses have reported concern around inflation of goods and services (9.8% in May) and since March, there has been a jump in the share of businesses reporting energy prices as a main concern (10.4% in May), although this has fallen back from a spike in April.

• The increased concern regarding energy prices reflects the ongoing uncertainty that the conflict in the Middle East will have on oil and gas prices, albeit they are notably lower than the temporary price spikes since the end of February.
• BICS data indicates that 75% of businesses in May were very or somewhat concerned about energy prices. This concern is relatively broad based across sectors, however is most notable in the transport and storage sector (88%) and accommodation and food services sector (87%).

Business Costs

• As set out above, higher wholesale oil and gas prices have directly fed through to a sharp rise in petrol and diesel prices which is impacting on households and businesses across the economy. Most households are protected from the impact on household energy bills by the Energy Price Cap until July, however this does not apply to businesses who will be subject to changes in energy prices depending on their existing supplier agreement.
• UK producer input prices rose by 7.7% annually in April, up from 5.3% in March. Crude oil prices were the main driver of the increase in input costs, rising by 75.4% in the year to April.^[13]

• More broadly, the RBS Growth Tracker business survey also indicates that business input costs increased sharply in March and April with the indicator rising to its highest level since the end of 2022 and respondents reporting that this was largely due to the increase in fuel prices.^[14]

• Similarly, the prices charged for good and services by businesses has also increased sharply, albeit to a lesser extent, indicating that many businesses are at least partly passing on higher prices to customers.
• The extent to which businesses have needed or been able to pass on higher costs to customers in the past couple of months varies across sectors and can depend on a range of factors including the exposure of the sector to the increase in energy prices and demand and competition conditions in the sector.
• BICS data for April indicates that the transport and storage (60.1%) and construction (55.4%) sectors had the highest shares of businesses reporting that the prices of goods and services they had bought had increased compared to the previous month. In terms of the prices of goods and services sold, the administration and support services sector (36.2%) and the transport and storage sector (33.9%) had the highest shares of businesses reporting that their sales prices had increased.

• Looking ahead to the month of June, BICS data indicates that the majority of businesses (55.5%) expect the prices of their goods and services to be sold to stay the same while 21.3% expect their prices to increase and 1.3% expect their prices to decrease.
• Factors relating to the impacts on the global economy of the conflict in the Middle East (energy prices, transportation or haulage costs and raw material prices) have all risen since March as factors causing businesses to consider raising prices. However, labour costs, which have been the main factor causing businesses to consider raising prices over the past year, remains the most cited factor in May (39.4%).

• There remains notable uncertainty about the pace and extent to which businesses expect to be impacted by higher global price pressures across energy and wider commodities and also the feed through to consumer prices. However the expectation is that it will build over the second half of the year.
• For example, while there is a significant degree of uncertainty, BICS data indicates that the highest shares of businesses (43.4% and 43.8% respectively) expect their current gas and electricity contracts to end after September 2026 and into 2027.

Business Optimism

• The conflict in the Middle East and the elevation of uncertainty and risks to inflation and demand over the coming year has impacted notably on business sentiment and optimism.
• The RBS Growth Tracker business survey for April reported that while businesses on balance remained hopeful that demand conditions would strengthen over the coming year, business optimism fell over March and April to its lowest level since August 2022.^[15]
• Similarly, BICs data for May suggests that since the start of the year, the share of businesses expecting their performance to increase over the next year has fallen (from 31.4% to 28.5%) while the share of businesses expecting their performance to decrease has risen from 8% to 12.6%.