What will unlock the next phase of growth?

There’s no doubt that the first half of 2026 tested Scotland’s private businesses

Persistent inflation, instability in global energy markets and disruption to trade created a challenging backdrop, so it’s perhaps unsurprising that confidence has softened as the second half of the year beds in.

KPMG’s Private Enterprise Barometer tracks the growth ambitions, investment priorities and outlook of privately owned businesses across the UK. Six months on from our survey at the beginning of 2026, we returned to businesses to understand how changing economic conditions are influencing their plans.

Many Scottish businesses are looking to their own balance sheets to drive investment and growth, says Vishal Chopra

The findings point to a Scottish business community that is more cautious, but certainly not stepping back from growth.

More than two-thirds (68 per cent) of Scottish private businesses remain confident about their growth prospects, although that has fallen from 87 per cent at the beginning of the year and sits below the UK average of 80 per cent.

For me, that doesn’t suggest an ambition gap. Rather, it shows that businesses are responding realistically to their operating environment, while their appetite for growth remains as strong as ever.

One finding particularly stands out: almost six in ten (59 per cent) Scottish businesses are looking to their own balance sheets to drive investment and growth. That is slightly above the UK average of 57 per cent and only two percentage points lower than at the beginning of the year. At the same time, 30 per cent remain open to private equity investment.

At a time when the economic outlook remains uncertain, self-funding gives business owners greater control over when, where and how they invest. They understand their businesses and, where resources allow, they are prepared to back their own judgement.

That said, external investment can bring more than capital; it can also provide the expertise, networks and additional firepower needed to accelerate expansion. For ambitious businesses, the desire to retain greater control must be weighed against the opportunity to grow faster and at greater scale.

We can see the same pragmatism in where businesses are choosing to invest.

Technology, including AI, cyber security and digital transformation, is now an investment priority for 44 per cent of Scottish firms, increasing by six percentage points since the beginning of the year.

More than half (52 per cent) are also looking to diversify their services and broaden their customer base.

Taken together, those findings tell us that businesses are not simply riding out uncertainty; they are investing in technology that can improve productivity and competitiveness while looking for new customers and sources of revenue. In other words, they are taking practical steps now to strengthen their position for the future.

But businesses can only control so much. More than half (55 per cent) identify inflation and continued cost pressures, together with global disruption affecting supply chains and trade, as their greatest short-term risks. Meanwhile, half (50 per cent) cite the UK economic outlook and productivity growth as the most significant external factors shaping their investment, growth and exit decisions.

That helps explain why greater certainty matters, with more than a third (37 per cent) looking for the upcoming Budget to prioritise growth-focused investment and industrial strategy, alongside business profitability and competitiveness.

With the Scottish Parliament elections now behind us, businesses will be looking for renewed political focus to translate into greater economic certainty and a clear commitment to creating the conditions for investment.

Ultimately, Scotland’s private businesses are proving resilient and pragmatic, backing themselves, investing for the future and focusing on what they can control.

The appetite for growth remains strong; the challenge now is to provide the certainty businesses need to turn that ambition into sustained success.

Vishal Chopra, Scotland Senior Partner at KPMG UK