Manufacturing & Supply Chain

Scottish Engineering’s final quarterly report card of 2025 rounds off the year demonstrating resilience in Scotland’s engineering and manufacturing sector, despite continued pressures. Business confidence improved to +4%, export orders outperformed domestic demand, and 79% of firms maintained or increased staff even as margins fell sharply due to persistent cost pressures. Medium-sized companies delivered the strongest results, while exports continued to act as a buffer against weaker UK demand.

The findings come as the OBR’s November Economic and Fiscal Outlook confirms a tougher fiscal environment ahead. UK growth projections have been revised down, inflation is forecast to remain above target until 2027, and the overall tax burden is
set to reach a record 38% of GDP by 2030.

Paul Sheerin (pictured), Chief Executive of Scottish Engineering, said: “We want to remain balanced in our appraisal of this budget, but it’s hard not to be disappointed at the gap between the Government’s stated ambition to grow the economy and the reality of what this will deliver. Yet again our sector is showing its capacity for resilience, but the wider economic signals are hard to ignore whilst rising taxes, stubborn inflation and higher energy costs all add pressure at a time when companies are already managing tight margins. Despite this our members continue to take a long term view by investing in their people and looking to export markets for growth — a clear sign of their long-term approach to ensuring competitiveness.”