Scottish manufacturers are more confident about the year ahead than they were 12 months ago, with new research from MHA pointing to a sector that is continuing to invest despite rising operational pressures and an ongoing backdrop of global macro-economic uncertainty.
The 2026 MHA Manufacturing & Engineering Report shows that 85% senior executives surveyed in Scotland expect growth above 3% in the next 12 months, up from 75% in 2025 – despite citing ongoing conflicts in Iran and Ukraine, cyber security, tax increases and energy costs as hurdles. The UK and Ireland growth figure was 81%.
The Scottish findings are contained in a new survey by MHA, one of the country’s leading accountancy and business advisory firms which has offices in Edinburgh and Aberdeen. The survey was completed by 1,000 UK and Ireland C-suite leaders.
While there was positivity from Scottish manufacturing leaders that 75% would grow by at least 3% to 5% in the next year – the highest across the UK – this was tempered by the fact that Scotland has the lowest figures for potentially growing the business by more than 6% to 10% in the next 12 months – a figure of 10%, compared to the UK-Ireland 25.2% result.
Manufacturing is one of the key sectors for Stuart MacPherson, Partner at MHA in Aberdeen. He said: “The Scottish results in respect of growth are interesting in that the region has the highest percentage of companies expecting growth across all regions, yet the lowest expectations in terms of higher growth.
“That suggests that there is underlying confidence among Scottish companies but with an understanding that the market remains difficult due to the various external factors that are impacting the UK and world economy such as geopolitical conflict in the Middle East.
“The MHA Report also highlights that cybersecurity is one of the biggest concerns among Scottish respondents, with regulation also featuring as a significant obstacle – ranking second in Scottish responses compared to sixth overall.
“Like other areas, Scottish firms see the apprenticeship programme as a key plank in meeting the skills gap, although actively recruiting staff also features highly – more so than other regions – suggesting there is a market of skilled staff available in Scotland.
“Overall, the report paints a cautiously optimistic picture for Scottish manufacturing as long as steps are taken to deal with the challenges.”
From a UK and Ireland-wide perspective, Chris Barlow, partner and head of manufacturing and engineering at MHA, said: “Manufacturers remain optimistic, but that optimism is grounded in reality. Businesses are still dealing with geopolitical uncertainty, cost pressure and skills shortages, yet they are continuing to invest, innovate and plan for growth rather than retreating.”
Some of the key highlights from the Scottish figures show:
- The top challenges impacting manufacturing businesses in Scotland include – cyber security (40%), regulation (36.7%), skill shortages (35%), supply chain (33.3%) and energy costs (31.7%).
- Actions needed to address challenges include, investing in new technology / AI (40%), investing and strengthening IT systems (40%) and increasing supply chain options (33.3%).
- In Scotland, 85% of respondents expect investment in R&D to grow by at least 3% in the next 12 months, slightly ahead of the UK average.
- Since the Autumn Budget, Scots manufacturing firms have increased investment in recruitment of new staff (75%) – higher than the UK figure of 67.9%; AI (70%); technology (71.7%); upskilling staff (65%).
- Apprenticeship programmes and recruiting new staff are both priorities for Scottish firms. In Scotland, 38.3% of businesses are running apprenticeship programmes, slightly above the UK average of 36.6%. Similarly, 38.3% of Scottish firms are looking to recruit new staff – around 6% higher than the overall figure. However, Scotland trails the average when it comes to building partnerships with universities or colleges. Only 36.7% of Scottish firms are pursuing this route, compared to 43.6% across the UK-Ireland as a whole.
- Scottish firms are ahead of the rest on sustainability investment following the Autumn 2025 Budget, with 75% increasing spend in this area compared to the overall average of 68.6%.
UK summary – 2026 MHA Manufacturing & Engineering Report
Looking at the broader UK and Ireland picture, Chris Barlow, Head of Manufacturing at MHA:
The overall mood is cautiously positive. Manufacturers are more confident than a year ago – 81% expect growth above 3% this year, up from 77% in 2025. Investment in research and development continues to hold up well.
The Iran conflict has changed the picture. This is clearly influencing how businesses think about risk.
What UK and Ireland businesses are worried about:
- Supply chain disruption is now flagged by 35% of businesses, up from 31% in 2025 – and likely to rise further given the Gulf situation
- Energy costs are a concern for 33%, up from 30% in 2025
- Cybersecurity remains a top-tier worry at 34%, barely changed from 33% in 2025
- Technology change is actually slightly less of a concern than last year – 31% flag it now versus 34% in 2025
How businesses are responding: Rather than cutting jobs, most manufacturers are investing in new technology including AI (41%) and strengthening their IT systems (40%). The focus is on boosting productivity and building resilience, with hiring still continuing in some parts of the country.
What manufacturers want from government: Businesses are asking for skills and training investment, help with energy costs, better access to finance, and smoother trade with key markets. The clearest message is: consistent, long-term policy that lets manufacturers plan with confidence.
Policy certainty remains critical
Despite the announcement on the Government’s Industrial Strategy in June last year, businesses continue to call for practical support on skills, energy affordability, access to finance and friction-free trade, alongside a stable long-term policy framework that gives firms confidence to invest. The Industrial Strategy will be judged on whether it delivers that consistency across regions and sectors.
Barlow said: “The global backdrop remains uncertain, but the response from manufacturers is not hesitation. Firms are tackling immediate pressures while continuing to invest for the future.
“The challenge now is to strike the right balance between supportive, consistent intervention and the flexibility businesses need to innovate and grow.”
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