Confidence returning to the Scottish small business community

Confidence in the Scottish small business community is coming back after a collapse in optimism recorded earlier this year, according to new research from the Federation of Small Businesses (FSB).

FSB’s Scottish small business confidence index, published today, jumped from -154.8 points in Q1, the lowest ever figure recorded, to -10.1 points in Q2.

Over the same period, the UK-wide index increased by 138.4 points to -5.0 points. In England the reading was -5.6 points.

The research suggests that there has been some recovery in business optimism across the UK, though confidence remains on average slightly lower in Scotland.

However, expectations of future performance are increasingly polarised, with a quarter (25%) of the 195 Scottish business owners surveyed in June expecting their performance to be “much worse” over the coming quarter, whereas one in 10 (11%) expect the opposite.

FSB’s Scotland policy chairman Andrew McRae said: “After a complete collapse in business confidence in the previous quarter, the fact that confidence is coming back is most welcome.

“Given that so many small businesses were closed up until very recently, this increased optimism is due in no small part to the coronavirus support rolled out at speed by the UK and Scottish governments.

“But let’s be clear: small businesses are by no means out of the woods. These figures tell a tale of two economies – the one that is getting back to business and the one with a much tougher journey back.

“A division has opened up between those that have been able to access support or diversify their operations and those that have been unable to trade or tap into help.”

According to the research, the share of small firms in Scotland that have reduced headcounts over the last three months is at an all-time high (23%), while the proportion of businesses creating jobs is at an all-time low (1.5%).