Newly released figures have exposed a significant contraction in Scotland's small business sector, with the number of SMEs falling markedly since 2020. The data, obtained by the Scottish Liberal Democrats, shows a worrying trend for the nation's economic backbone.
Steep Decline in Business Numbers
The statistics reveal that the total number of small and medium-sized enterprises (SMEs) operating in Scotland has dropped from 177,020 in 2020 to 171,660. This represents a net loss of 5,360 businesses over the period. The figures were compiled from Scottish Government responses to parliamentary questions filed by the party.
Jamie Greene MSP, the Scottish Liberal Democrats' economy spokesman, who secured the data, has issued a stark warning. He stated that the SNP Government must act urgently to bolster support for small businesses, citing "concerning drops" across the country.
Rural Constituencies Bear the Brunt
A deeper analysis of the data, which tracks constituency-level changes since 2015, shows the decline is not evenly spread. Over the past decade, 24 parliamentary constituencies have witnessed a fall in their SME count.
The downturn has been particularly acute in more remote and rural regions. Constituencies across Aberdeen and Aberdeenshire have suffered a 13.8% decrease in SME numbers since 2015. Similarly, Caithness, Sutherland and Ross have seen an 8% fall.
Mr Greene attributed the decline to multiple barriers facing entrepreneurs. "I’ve spoken to lots of skilled and entrepreneurial people who feel there are too many barriers to starting their own business," he said, pointing to "economic incompetence" and a "crushing burden of red tape."
Political Response and Budgetary Measures
The Scottish Liberal Democrats highlight that they have already secured some financial commitments in the draft Scottish budget for 2026-27. These include a new £2.5 million package for young entrepreneurs and an initial £36 million for business rates relief.
However, Mr Greene argued this is insufficient. "I am pleased that Scottish Liberal Democrats secured some support for businesses in the draft budget, but we think the Scottish Government can go further," he stated. He pledged that his party would be "squeezing the Scottish budget for every penny to deliver for businesses" in the coming weeks.
In response, Deputy First Minister Kate Forbes defended the government's record. She emphasised that entrepreneurs are "the backbone of our economy" and stated the government is working "systematically" to create the right support conditions.
Ms Forbes cited more recent positive indicators, including a 17.9% increase in Scottish start-up businesses in the first half of 2025. She also noted that investment deals in Scotland grew by 24% in the first half of 2025 compared to the second half of 2024.
She concluded by pointing to the Scottish Budget 2026-27, which promises continued support for business and "record funding for our entrepreneurs and start-ups" to drive long-term prosperity.
