Speaking at our CBI Scotland Annual Dinner in Glasgow on 10 September, CBI Chief Executive Rain Newton-Smith set out a message that runs to the heart of the debate in both Holyrood and Westminster: you cannot fix the cost of living without also fixing the cost of doing business. It is an argument made in full in the CBI's new report, “Room to Grow: Tackling the cost of doing business to ease the cost of living ”.
Rising costs are squashing growth
The report's main finding is simple: with demand weak, firms are doing everything they can to avoid passing costs onto consumers. Instead, they are swallowing them through thinner margins, less investment and slower hiring. Profitability is now at its lowest since the 2008 crash, which leaves little room for the productivity gains that higher wages depend on. Costs do not disappear, they travel, and they reach people in the end, through the job that never comes or the investment that never happens.
The evidence behind that argument is stark. Businesses paid almost £345 billion in taxes in 2025/26, some 31% of all UK receipts, with employer National Insurance now overtaking Corporation Tax as the largest single source of business tax revenue. More than nine in ten firms have seen energy costs rise since 2019, and UK industrial electricity prices sat around 45% above the G7 median across 2023 and 2024.
Firms also lose time and money navigating a tax and compliance system that is complicated and full of overlap, and that same friction discourages investment in the high streets and industrial sites that both governments say they want to revive.
Scottish firms do not care whether a cost comes from Holyrood or Westminster.
They face one bill, squeezed from every direction, and they need both governments working together to bring it down. That means acting on three fronts:
- On employment , a targeted rise in the employer National Insurance threshold would help firms create the jobs, particularly for young people, that the current cost of hiring is putting out of reach
- On energy , we need policy costs lifted from business bills, alongside certainty on Jackdaw and Rosebank, first consented in 2022 and stalled for too long while the workforce we will need for the transition is left in limbo
- And in Holyrood , the most useful step right now would be dropping policies like the proposed food price cap, which cannot hold down the underlying costs of farming, production, labour and energy, and would simply shift the pressure onto Scottish firms today meaning that consumers pay tomorrow.
At our CBI Scotland Annual Dinner, Rain made the point through the story of the Clyde: public investment and a generation of enterprise turned it into one of the great industrial centres of the world. The lesson holds today, prosperity has to be created before it can be shared, and it is business that creates it.
The Budget must deliver for business to unlock growth
With a difficult UK Budget approaching, the test is whether government avoids the temptation to ease the cost of living by piling more onto the cost of doing business, because a heavier load on firms does not lighten the load on households.
"Business is the economic engine that powers better public services, creates jobs and raises living standards," Rain said at the report's launch. "But firms cannot play that role if they're held back by mounting costs and fading confidence." The job now, in Scotland and across the UK, is to give firms the room to grow.
