By Jamie O’Neill
Copyright scotsman
Scotland’s businesses are defying expectations in 2025. According to recent published research, an impressive 94% of Scottish mid-sized firms have already surpassed their annual targets. This performance is being underpinned by increased access to finance, sustained capital investment and, critically, productivity gains delivered by AI and other digital technologies. Digital transformation is no longer a back-office efficiency matter; it’s a strategic imperative for competitiveness and sustainability. Scotland’s businesses are now at a pivotal juncture, as digital technologies transition from generative to agentic AI – systems capable of executing complex, multi-step tasks autonomously. This evolution is not merely technological; it’s cultural. Whilst more traditional, generative AI required companies to capture and formalise tacit knowledge – workflows, decision-making processes and the strategic thinking behind those – agentic AI leans on real-time data to dynamically plan, adapt and execute to achieve business goals. With such autonomy comes heightened responsibility. Successful digital transformation demands regulatory foresight, a sophisticated understanding of risks and robust governance. For businesses, this means aligning digital initiatives with long-term strategic goals and risk-appetite – and ensuring that these are underpinned by appropriate guardrails to ensure legal, regulatory and ethical compliance. Investor sentiment suggests the private sector is ready to meet the challenge. More than one-third of mid-sized Scottish firms plan to increase capital expenditure this year, while one in two are actively pursuing strategic partnerships to accelerate growth. Policymakers now face the task of ensuring that public-sector frameworks can support private-sector ambition. The next Scottish Budget offers a timely opportunity to address perceived structural barriers – whether due to skill shortages or cost concerns. A coordinated package, combining targeted investment in digital infrastructure – considering the upcoming reset of the Scottish government’s original £26 billion Infrastructure Investment Plan, for example, in combination with enhanced workforce development initiatives such as Techscaler and the Digital Economy Skills Action Plan – will be essential to unlock the long-term productivity and inclusive-growth benefits of digital adoption. Meanwhile, from a legal perspective, two Westminster bills may redefine the legal environment in which Scottish firms operate. The Cyber Security and Resilience Bill aims to modernise the UK’s ageing Network and Information Systems framework, expanding its scope to include managed service providers, data centres, and high-impact SMEs. It will impose stricter security standards, enhance supply chain oversight, and empower regulators to intervene swiftly in response to emerging threats. In parallel, the Artificial Intelligence (Regulation) Bill proposes the creation of an independent AI Authority to oversee regulatory alignment, mandate transparency, and enforce ethical standards. While the AI Bill does not yet have government sponsorship, and so may be unlikely to pass in its current form, it certainly reflects the growing public demand for more robust AI oversight. It’s against this backdrop that Scotland’s economic outlook will be shaped – by those businesses willing to deploy today’s digital tools and govern them responsibly, rather than waiting for flawless conditions. By embedding digital capabilities and sound governance at the heart of corporate strategy, Scottish businesses can do more than weather present challenges; they can position themselves at the forefront of the next wave of economic innovation. Jamie O’Neill is a legal director in DLA Piper’s Intellectual Property and Technology practice
