Small Business Confidence Drops in Scotland

22/09/2016 - Confidence levels among small businesses in Scotland have fallen to their lowest level in five years, following the UK vote to leave the European Union.

A survey by the Federation of Small Businesses (FSB) found they are more pessimistic than in other parts of the UK.

Scottish levels of confidence were below the British average.

More Scots small companies intend to shed staff than recruit more.

And while the balance of companies in the survey was positive on revenue growth, it went negative on the number seeing profits rise.

However, the sector has shown signs of willingness to invest.

Many more companies intend to invest than to cut back, helped by the lower cost of credit since borrowing conditions were further eased.

The survey is a measure of companies seeing growth, contraction or no change, and it focuses on the difference between growth and contraction.

'Key problem'

On that basis, there is a 19 percentage point gap between those FSB members who are negative about output, and those who foresee growth. That has been in decline since the middle of 2015, according to the survey.

The "state of the domestic economy" was seen as the key problem by many, ahead of consumer demand and skills shortages - though there is overlap between these elements.

The negative finding on employment was only a three point gap, and on investment, there was a 24 point positive gap between those planning to expand spending and those intending to cut back.

Andy Willox, the Scottish policy convener of the Federation, said: "These figures show that Scottish small business confidence fell following June's referendum. However, a majority of Scottish businesses have been pessimistic about business prospects for the last nine months - with pressure on 

Scotland's service sector and the decline of the oil and gas industry at least partially to blame.

"While cheaper credit is encouraging firms to get on with postponed investment, there's a lot of work to be done to restore long-term confidence.

"Businesses in Scotland and elsewhere in the UK are worried about where the economy is going. We expect those steering the country to do their utmost to provide clarity and support for Scottish smaller firms."

The survey was carried out between 12 July and 18 August, with 1,035 respondents across the UK and 117 in Scotland.

Source: BBC News

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