Trade in Services Report

Professional & Business Services

3.1 Sectoral Composition & Overview

• Gross Value Added (GVA) 2022: £6.2bn which constitutes 3.7% of the Scottish Economy. By comparison, the UK PBS Sector was worth £140.1bn in 2022, which is 6.2% of the UK economy.
• Employment 2024: 137,000 workers which is 5.2% of Scotland’s workforce. In 2022, employment was 138,000 workers which implies a productivity of £44,869.90 per worker in 2022.
• International Trade (Destination outside the UK) 2022: £1.4bn representing 22.3% of the PBS sector’s total Gross Value Added in Scotland.
• Domestic Trade (Destination in Rest of the UK) 2022: £3.5bn representing 56.4% of the PBS sector’s total Gross Value Added in Scotland.
• Total Exports (Destination not in Scotland) 2022: £4.9bn representing 79.0% of the PBS sector’s total Gross Value Added in Scotland.

Source: Scottish National Accounts, UK National Accounts, BRES

Professional Business Services encompasses firms in consulting, accounting, tax, legal, advertising, and architecture. For the quantitative data analysis element, this sector includes firms classified under the Standard Industrial Classification (SIC) codes:

• 69.1 – Legal
• 69.2 – Accounting, Auditing, & Tax Consultancy
• 70 – Head Offices & Management Consultancy
• 74 – Other Professional Services
• 83 – Business Support Services

The PBS sector in Scotland is again well integrated with its UK counterpart, albeit structured slightly differently^[23].

Legal and Accounting, audit, & tax consultancy services constitute 48.2% of GVA in the UK sector, but only 38.3% in Scotland.

These two areas have higher productivity than other areas in PBS, which may explain why the Scottish PBS sector is proportionally smaller than the UK wide sector.

With 56.4% of PBS GVA exported to the Rest of the UK, this also indicates a high degree of integration with the UK sector. However, uniqueness in the Scottish Legal system will make some parts of the sector more distinct from its UK counterpart than others.

Source: Scottish National Accounts

The value of PBS international exports typically outpaced the growth of the sector overall before the pandemic, averaging 7.8% and 5.9% annual growth respectively.

Growth in the value of exports to the Rest of the UK averages 7.7% annually in the pre-pandemic period. Again, underscoring the integration of the sector with its UK counterpart in influencing its growth rate.

During the pandemic, the value of the sector and its international exports declined. However, domestic and international exports were more affected by the pandemic than the sector overall. By 2022, the value of the sector and its exports had recovered from the pandemic having surpassed 2019 levels.

Source: Scottish National Accounts

Source: OECD, CITP Research

Source: OECD, CITP Research

Source: OECD, CITP Research

Exports from the UK’s PBS sector are highly concentrated within the top 10 destination markets for professional services, which the European Union and United States dominate.

Over the past decade, the UK PBS trading environment has generally liberalised, positioning the UK as a more open market compared to the EU and the OECD average.

This reflects a broader trend of global openness in the UK’s post-Brexit reality. While the EU maintains free trade internally, it remains relatively restrictive toward external partners, particularly for service-based sectors.

Being outside the EU, UK professional services now face higher barriers when trading with the EU despite improved access to non-EU markets. The net result is greater access to individually less valuable markets.

Despite this liberalisation, certain domestic barriers remain, primarily related to licensing, qualifications, and operational transparency. Among the UK’s largest trading partners, the US and EU, the most significant restrictions involve temporary movement of service providers and entry of foreign firm.

* Score of 0 = Completely Open | Score of 10 = Completely Restricted

Source: OECD, CITP Research

3.2 Current and future global regulatory and non-tariff issues in the PBS Sector

3.2.1 Global regulatory and non-tariff landscape

Across Professional and the Business Services, the dominant non-tariff barriers (NTBs) are behind‑the‑border regulations: licensing and authorization regimes; foreign equity and legal‑form limits; nationality/residency requirements; restrictions on the movement of people (Mode 4); and regulatory transparency deficits (e.g., opaque rulemaking, limited notice‑and‑comment). These measures are systemically captured in the OECD Services Trade Restrictiveness Index (STRI) show high relative restrictiveness for several professional services compared to many networks or digitally deliverable sectors.^[24]

Specifically, legal and accounting services stand out. The OECD STRI papers report average restrictiveness near 0.30–0.31, with country ranges up to 0.73 in legal and 1.00 in accounting/audit in the first vintage, driven by market entry limits (equity caps, legal‑form), movement of people barriers, and discriminatory licensing. Later annual updates maintain that professional services remain among the more regulated sectors, with persistent fragmentation across jurisdictions. Likewise, the World Bank–WTO Services Trade Policy Database (STPD) confirmed similar policy levers -licensing, equity limits, nationality requirements, and data/operational restrictions as outstanding barriers.^[25]

Future regulatory and non-tariff issues in the Professional and Business Services sector are notably complex. First, gradual and selective liberalisation are going on but there is persistent fragmentation. For example, where liberalisation occurs, it often focuses on clarifying licensing, updating ownership/legal‑form rules, and modernising transparency, but cross‑border and mobility frictions endure. The UNCTAD urges “best‑fit regulations” with better coordination among domestic regulators and negotiators to balance openness and national policy goals.^[26]

Second, digitalisation, data, and AI governance are becoming de facto NTBs. Professional services are rapidly embedding AI and digital workflows (document review, drafting, analytics). Private‑sector outlooks show AI adoption is accelerating but intersects with rising data privacy, cross‑border data flow limits, model governance, and professional liability. These create new compliance layers that function as NTBs for digital delivery or shared services across borders.^[27]

Third, mobility and recognition are persistent barriers. According to the World Bank–WTO STPD/STRI documents, continuing visa/labour‑market tests, residency rules, and practice‑rights limits fall into this category. This implies that mobility will remain a binding NTB unless trade agreements deepen MRAs and introduce transparent, time‑bound licensing.

Fourth, heightened enforcement and ethics/compliance expectations is recognised as rising regulatory barriers. For instance, private‑sector risk reports for accounting/audit show record fines in some jurisdictions and intensifying scrutiny of culture, audit quality, and ethics, with implications for cross‑border assurance and advisory mandates. This raises costs and complexity for professional and business services providers and can deter market entry or limit service scope for foreign affiliates.^[28] More stringent supervisory expectations have increased formal compliance requirements, while firms have simultaneously adopted more conservative risk and governance practices in response to heightened scrutiny and reputational risk. As a result, the effective burden faced by firms often exceeds the requirements set out in regulation alone.

3.2.2 Sub sector mapping

Consulting: Consulting services face comparatively lighter formal licensing obligations than legal or accounting professions, yet they encounter significant NTBs via local business licensing, commercial‑presence requirements, visa and labour‑market tests for consultants, and procurement preferences favouring domestic firms. These barriers are captured in the OECD’s STRI dimensions on movement of people and regulatory transparency, which consistently show frictions in cross‑border consulting due to opaque procedures and temporary‑entry restrictions. The World Bank–WTO STPD/STRI further documents constraints around licensing processes, foreign equity rules, and data-handling requirements. The WB-WTO STPD/STRI also confirms that consulting, especially digital or analytics-driven one, must navigate varied domestic rules across jurisdictions. Looking ahead, industry analyses predict that consulting firms will face rising NTBs linked to AI governance, ESG (Environmental, Social and Governance) documentation, and data‑transfer compliance, as regulatory scrutiny around algorithmic transparency and digital‑workflow controls accelerates. This is reinforced by private‑sector regulatory‑intensity assessments, which highlight a tightening compliance environment affecting advisory and knowledge‑intensive service providers globally.^[29]

Accountancy & Tax: Accountancy and tax services remain among the most highly regulated professional services worldwide. The OECD STRI consistently reports elevated^[30] restrictiveness due to ownership and legal‑form limits, nationality or residency requirements, and extensive licensing and fit‑and‑proper criteria that restrict foreign entry. The STRI findings highlight accounting and auditing services reaching restrictiveness scores as high as 1.00 in certain jurisdictions, emphasising the dominance of market‑entry barriers and cross‑border practice limitations. Future regulatory intensity is expected to rise. Some private‑sector risk reports show record enforcement fines, tightened ethical and audit‑quality oversight, and increased scrutiny of firm culture and governance, all of which elevate compliance burdens and act as deterrents to foreign service providers.^[31] For UK and more specifically Scottish firms, these barriers are tangible and can largely be addressed by empowering the regulatory bodies to establish the relationship with peers in other countries that allows equivalence regimes that allows individuals and firms to market their services and ply their trade. Roundtable participants highlighted that these challenges are particularly relevant in key markets such as the European Union, where the absence of comprehensive equivalence arrangements has increased the need for local authorisation and presence. Participants also noted that in other markets, including parts of Asia and the Middle East, evolving regulatory frameworks and limited recognition pathways can create similar barriers, reinforcing the importance of early regulatory engagement and relationship-building.

• Advertising & Marketing Services: Advertising services face fewer formal licensing requirements but operate within a dense web of regulatory and NTB constraints, including content standards, consumer-protection rules, media‑ownership limitations, and increasingly stringent data privacy and ad‑tech
• regulations. The OECD’s STRI policy‑trend analysis notes that digital‑trade restrictions, especially those related to cross‑border data flows and telecom/digital governance, are rising contributors to services trade barriers—particularly relevant for advertising firms reliant on digital targeting, analytics, and remote campaign delivery.^[32]
• Architecture: Architecture and related design/engineering services face pronounced licensing and professional‑registration requirements, including protected titles, site‑supervision obligations, and residency or local‑presence conditions for signing off on designs according to the OECD STRI. The lack of mutual recognition agreements^[33] (MRAs) for qualifications across many jurisdictions further amplifies barriers, limiting firms’ ability to deliver cross‑border design or construction‑related services even when digitally enabled.^[34]

3.3 Professional & business services roundtable summary

This roundtable convened representatives of Scotland’s legal, accountancy and accreditation communities to explore how professional and business services (PBS) firms engage in international markets, the non‑tariff barriers (NTBs) and frictions they face, and the policy levers that could enhance export growth. Discussion covered major markets (US, EU and the Middle East), mobility and practice rights, mutual recognition of professional qualifications (MRPQ), data transfer and storage, accreditation recognition, ownership and investment constraints in the legal sector, and the role of Scottish and UK Government trade promotion.

Key participant messages were: (i) mobility often matters more than formal qualification recognition for legal services, yet frictions at the border (notably in the US) and gaps in EU short‑term mobility provisions reduce competitiveness; (ii) the loss of automatic MRPQ post‑Brexit is particularly salient for accountancy, risking exclusion from new EU‑standard service lines (e.g. sustainability assurance); (iii) cross‑border data governance is operationally challenging; (iv) UK accreditation outcomes lack mutual recognition in the EU, driving duplication; and (v) a multilateral PBS forum, convened by Scottish Government, and bringing together professional bodies in law, accountancy, tax advisory, etc. (and potentially disciplines covered in other roundtables such as engineering) would assist coordinating trade promotion for PBS and also in other policy areas.

3.4 SWOT Analysis: Professional and Business Services Sector

3.4.1 Strengths

Reputation and Standards

• Legal and accountancy services in Scotland operate both as standalone exports and as enabling services for other sectors, particularly energy.
• Accreditation by UK professional bodies, including ICAS and ACCA, functions as a strong international market signal.

International Linkages

• Established commercial links with the United States, European Union and increasingly Middle East, particularly the UAE and Saudi Arabia.
• Experience coordinating multi-jurisdictional mandates from a Scottish base, particularly in energy disputes and arbitration. International linkages that began with energy has allowed businesses to transcend beyond energy into other sectors which showcases the need for a foundational sector that allows professional and business services to thrive.
• Access to the wider UK market, especially London, enhances credibility and scale. For many firms, the value proposition combines Scottish expertise with UK market integration.

Enabling Role in Trade

• Accountancy and legal services provide advisory support for market entry, compliance and structuring across other exporting sectors.
• Recent consolidation and overseas investment in mid-sized firms may enhance international exposure and referral networks.

3.4.2 Weaknesses

Mobility Constraints

• Increased scrutiny at US borders, for even routine visits and gaps in EU short term mobility arrangements have reduced Scotland’s attractiveness as a base for leading cross border work.
• Lawyers were not included in the list of professions eligible for certain short-term business activities under the UK–EU Trade and Cooperation Agreement. Evidence from the roundtable also suggests inadequate understanding within a sector on what is and isn’t permissible activity currently under the TCA agreements.

Loss of Automatic Recognition

• Post Brexit loss of automatic mutual recognition of professional qualifications has increased administrative burden, particularly for accountancy.
• Maintaining equivalence with evolving EU standards, including in sustainability assurance, is resource intensive.

Data and Regulatory Complexity

• Divergent cross border data transfer and storage rules create delays in onboarding and project execution.
• Multi jurisdictional matters require reconciliation of conflicting data regimes, documentation of compliance and, in some cases, mid-project system adjustments.
• Rapid regulatory change in digital and AI governance adds further operational friction.

Capital and Coordination Gaps

• More restrictive ownership and investment rules in Scotland compared to England and Wales may limit access to growth capital in legal services.
• Absence of a dedicated Scottish Government multilateral PBS forum weakens coordinated trade promotion.
• Perceived opacity in engagement with UK trade negotiations limits effective devolved input.

3.4.3 Opportunities

Geographic Deepening

• Middle East markets, particularly the UAE and Saudi Arabia, offer pipeline opportunities linked to long-standing energy and related services relationships. Given that these markets are nascent, there is a narrow window to pre-empt future trade barriers as they develop by fostering cooperation among regulatory bodies.
• The United States remains a core referral source, with sectoral clusters such as energy generating cross border mandates.
• Nordic markets continue to generate energy and disputes related work.

Scotland as a Delivery Hub

• Positioning Scotland as a cost-effective hub for multi-jurisdictional project management.
• Leveraging specialist energy expertise, competitive cost base relative to London and reliable UK law capabilities. Forty per cent of all commercial law and financial transactions utilise English law.
• Coordinating international mandates from Scotland without requiring extensive overseas physical presence.

Standards Led Differentiation

• Emerging global focus on AI governance and data standards creates scope for differentiation in data heavy services such as discovery, investigations and managed legal services.
• Demonstrating strong data governance can shorten buyer due diligence and strengthen bids.

Trade Agreement Leverage

• Recent trade agreements with Australia and New Zealand, and CPTPP participation, contain provisions that may reduce frictions around recognition and conformity assessment.
• Targeted guidance could increase firm level awareness and utilisation of these provisions.

Policy Windows

• Formal review of the UK–EU Trade and Cooperation Agreement in 2026 offers an opportunity to improve short-term mobility. This is the biggest barrier for Scottish service exporters.
• Regulatory developments in India regarding international legal practice signal potential medium-term openings.
• Reinvigorated Scottish branding in Brussels and stronger coordination mechanisms could enhance visibility and strategic positioning.

3.4.4 Threats

Post-Brexit Reputational Shift

• Scotland and the wider UK are increasingly perceived as outside the EU ecosystem. This perception matters even in the presence of no specific regulatory frictions.
• Work previously coordinated from Scotland is being rerouted to EEA jurisdictions such as Iceland, Norway or Switzerland.
• Reduced perception as a gateway to the EU weakens Scotland’s role in multi urisdictional project management.

Recognition and Accreditation Risks

• UK accreditation outcomes are not automatically recognised in the EU, creating duplicate processes for clients selling into the single market.
• Additional time and cost weaken Scotland-based advisers’ competitiveness.

Talent Pipeline Pressures

• While not strictly in the realm of trade policy, proposed reduction in graduate visa duration from 24 to 18 months risks making qualification pathways for international students unworkable creating a longer term ceiling on the growth potential of service sector providers.
• Reduced access to international trainees and specialists threatens firms’ ability to scale cross-border mandates from Scotland.

Competitive Realignment

• EEA aligned jurisdictions may continue to capture work linked to regulatory alignment advantages.
• Further divergence between UK and EU regulatory standards may increase friction and further erode Scotland’s hub positioning.

3.5 Roundtable Feedback and Policy Considerations

3.5.1 Trade Policy: Reserved to the UK Government, with a Scottish Government Advocacy Role

• Encourage the UK Government to add lawyers to the relevant short-term business visitor list when the UK–EU Trade and Cooperation Agreement is formally reviewed in 2026, to facilitate temporary market access for legal services providers.
• Prioritise mutual recognition of professional qualifications with the EU and priority third countries, working jointly with the UK Government to prevent regulatory divergence between professional bodies and to support secondments, capability development and cross-border practice.
• Safeguard the UK’s public interest accreditation model in future trade negotiations, particularly with the United States, and pursue mutual recognition of conformity assessment with key trading partners to reduce duplicate accreditation costs faced by Scottish exporters.
• Sustain structured regulatory dialogue with international partners on artificial intelligence and data governance and publish practical guidance to reduce compliance burdens for Scotland based firms handling cross border data.
• While not completely in the trade policy realm, encourage the UK Government to stabilise international talent routes for export-facing firms by reconsidering the proposed reduction in graduate visa duration from 24 months to 18 months, recognising the sector’s reliance on international trainees and specialists. Future growth in services trade cannot happen if skilled talent cannot remain in Scotland.

3.5.2. Trade Support: Within Devolved Competence and Joint Delivery with UK Partners

The Scottish Government and Scottish Enterprise can act directly to strengthen coordination, reduce frictions and enhance export readiness.

• Establish a Scottish professional and business services forum, mirroring the UK Professional and Business Services Council, to coordinate professional bodies and intermediaries, align international messaging and plan joint export promotion. This recommendation was unanimously endorsed by participants at the roundtable.
• Rebuild a Scotland branded European convening platform following the closure of Scotland Europa, for example through the development of a Scotland House style presence in Brussels, to restore visibility, stakeholder access and network positioning for exporters.
• Develop a services mobility toolkit covering the EU and the United States, clearly setting out permissible short term activities, documentation requirements and practical guidance to reduce border-related risks. This is particularly important for legal services, where reputational and compliance risks are heightened.
• Establish a data transfers helpdesk providing decision trees, model clauses and practical support for legal discovery, managed services and other data intensive cross border work.
• In partnership with the Department for Business and Trade, raise awareness of recognition and conformity assessment provisions available under recent trade agreements, including those with Australia, New Zealand and CPTPP partners, and provide guidance on practical utilisation.
• Improve coordination of trade promotion activity with the Department for Business and Trade by aligning UK wide campaigns with a clear Scottish identity, providing longer lead times for trade missions, offering upfront support for eligible SMEs and ensuring structured follow-up to convert interest into contracts.
• Address measurement gaps by launching a services exporter panel comprising rotating professional and business services firms to capture quarterly data on export pipelines, contract wins, frictions and time-to-contract. This evidence should inform both trade policy advocacy and trade promotion design.

3.6 Case Study: Accountancy Firms in Scotland at the whims and fancies of negotiation appetite of EU bodies

A Scotland based accounting firm historically exported audit, assurance, tax, and advisory services to EU clients on a cross-border basis, supporting multinational groups, cross-border transactions, and regulatory compliance. Prior to Brexit, UK professional qualifications were recognised across the EU under mandatory mutual recognition frameworks, allowing UK-qualified accountants to practise, sign off, and temporarily operate in EU member states with minimal additional authorisation. Cooperation between professional bodies was required by law, not negotiated case by case.

UK professional qualifications were treated as third-country credentials, with recognition determined nationally by EU member states and, in practice, by domestic accounting bodies. Cooperation between UK and EU professional bodies has become discretionary rather than automatic. In several jurisdictions, UK qualified accountants can no longer sign off audits, issue statutory opinions, or provide reserved services without local requalification, registration with national professional bodies, or formal collaboration with EU qualified practitioners.

This shift has created a structural coordination problem. Scottish accounting firms seeking to continue serving EU clients now depend on cooperation from EU professional bodies to recognise qualifications or permit joint working arrangements. However, EU bodies have limited incentives to facilitate this. Granting recognition to UK qualified accountants increased competition within domestic markets, dilutes professional rents, and offers few reciprocal benefits. As a result, recognition processes remain slow, fragmented, and uneven across jurisdictions with no obligation on EU bodies to prioritise market access for UK professionals.

In response, the firm has altered its operating model. UK based accountants continue to provide technical analysis and advisory input, but final opinions, statutory sign-offs, and regulated outputs increasingly had to be delivered by EU qualified accountants. This has been achieved through local partnerships, subcontracting arrangements, or the establishment of EU based teams. These changes have raised coordination costs, reduced the share of value added delivered from Scotland, and weakened the firm’s ability to export services directly on a cross-border basis.

The barrier did not operate through an explicit prohibition on trade. Instead, it arose from the interaction of professional regulation, national discretion, and asymmetric incentives between UK and EU professional bodies. While cross-border accounting services remained technically possible^[35], they require additional layers of local involvement that shifted activity and authority into EU markets.

This case illustrates how, in 2026, the loss of mandatory professional recognition and the absence of incentives for EU professional bodies to cooperate function as non-tariff barriers to Scottish accounting services exports. Market access depends not only on regulatory compliance, but on discretionary cooperation by domestic gatekeepers whose incentives favour localisation over cross-border provision, reducing Scotland’s role as a direct exporter of professional expertise.