26/11/2025
STA response to UK Budget
A “Major Setback’ for Scottish Tourism
Marc Crothall MBE, Chief Executive of the Scottish Tourism Alliance, said:
“Today’s Budget is a major setback for Scotland’s tourism and hospitality sector. At a time when businesses are already at breaking point, the Budget adds further cost pressures and fails to deliver the targeted support urgently needed to protect jobs, rebuild confidence and maintain the viability of thousands of operators.
The sector needed a Budget that reduced the cost of employment, strengthened consumer confidence and supported recovery. Instead, today’s measures risk making an already difficult outlook even more precarious.
The STA is fully supportive of better pay for the sector’s workforce in making it a more attractive and valued career choice, but raising the national minimum wage for 18 to 20-year-olds above the inflation rate will only add to business costs and once again make it challenging for our sector businesses to invest in their product to stay competitive.
There is a risk that the rise in the Minimum Wage will instead act as a disincentive to employ less experienced young people, having a detrimental impact on fostering new talent in the sector.
The Scottish Tourism Alliance survey carried out earlier this month exposes the depth of the challenge: more than 70% of businesses expect trading conditions to worsen, operating costs (59%) and taxation (50%) remain the biggest threats, and 15% expect to make redundancies within six months. Businesses are running extremely lean, with staff covering multiple roles, reduced opening hours and stripped-back services becoming the norm.
With today’s announcement that personal tax thresholds will be frozen for a further three years, pulling more people into higher tax brackets, household disposable incomes will come under even greater pressure, further weakening domestic tourism demand at a time when the sector can least afford it.
Following the Chancellor’s announcement on business rates for hospitality businesses in England, we would urge the Scottish Government to deliver a permanent reduction in business rates for businesses of all sizes in its 2026-27 Budget announcement. This would give much-needed certainty and ensure our businesses can effectively compete with their counterparts over the border.
With business rates being reduced for retail, hospitality and leisure properties in England, there will now be even greater pressure on the Scottish Government to ensure that businesses north of the Border are not placed at a further competitive disadvantage.
The introduction of new powers for visitor levies in England also raises serious concerns about the UK’s global competitiveness, making it even harder to attract international and domestic visitors in an increasingly competitive global market.
The reduction in writing-down allowances in corporation tax announced today will further constrain the ability of businesses to invest at a time when 46% have already told us they are delaying or cancelling investment.
The decision to increase alcohol duty in line with inflation will also have a knock-on impact on our valuable Scotch whisky sector, which is already grappling with US tariff changes. As a major driver of tourism for the country and a lifeline for many communities, this will negatively impact the wider tourism sector, including the whisky industry’s ability to invest in its visitor attractions.
Today’s Budget also places further pressure on household finances. Any reduction in disposable income directly affects discretionary spending, and tourism and hospitality businesses feel those impacts first. With 72% of operators expecting to raise prices and 46% delaying investment, reductions in consumer spending power will translate into lower bookings, shorter stays and reduced visitor expenditure.
Tourism is a cornerstone of Scotland’s economy. The visitor economy generated £10.8 billion last year, supports around 245,000 jobs and sustains more than 16,000 businesses. Any further cost pressure, whether through taxation, employment costs or regulation, risks accelerating the loss of capacity, reducing job opportunities and undermining Scotland’s ability to compete.
Scotland’s tourism and hospitality sector urgently needs a predictable, competitive and supportive fiscal environment. Today’s Budget does not provide that. Instead, it intensifies uncertainty and does little to create the conditions required for businesses to retain staff, invest, grow and deliver the world-class visitor experience Scotland is known for.
We will now review the detail of the Budget and communicate its implications for the sector. Our focus will be on pressing the UK Government to address the escalating cost burden on employers and to recognise the impact of today’s decisions on tourism demand and competitiveness. As we look ahead to the Scottish Budget in January, we will also be urging the Scottish Government to deliver a Budget that stabilises the sector, prevents a new wave of job losses, which will hit Scotland’s young people in particular, averts further business closures and takes decisive action to reverse Scotland’s declining competitiveness on the world stage.”
The Scottish Licensed Trade AssociationUKinbound UKHospitalityASSC Scotland Scottish Independent Tour Operator AssociationHighland Hotels Association Edinburgh Hotels AssociationFSB ScotlandHospitality Industry Trust Scotland
