Scottish business sentiment ‘improving’

A major survey of Scottish companies has found some evidence of growing confidence despite a challenging outlook.

The Addleshaw Goddard Scottish Business Monitor, produced in partnership with the Fraser of Allander Institute, indicates that while day-to-day business activity remains substantially below normal levels, the volume of overall business activity anticipated for the next six months is expected to recover “significantly”.

Results from the survey show the average firm expects to operate at 51-75% capacity when compared to normal levels for the next six months, although one in every four firms expects to operate at normal or above-normal capacity.

The survey also found many businesses have significantly increased their debt to get through the lockdown period, with 47% of firms saying their burden has increased as a result of the pandemic. Expectations for employment over the next six months have increased from -57% to -21%, with capital investment recording an increase from -68% to -21%.

Overall, the responses indicate business sentiment around operational capacity, day-to-day activity, employment and debt levels, is expected to depend largely on a combination of how the virus is contained over the coming months and how Scottish policy reacts.

David Kirchin, head of Scotland at Addleshaw Goddard, said: “There is no doubt the economic outlook for the foreseeable future looks testing and, while activity levels are now improving, they remain challenged.

“However, there is encouragement to be found in the survey data.

“Nearly half of companies say they expect no change to their workforces and 61% of companies described their cashflow position as secure or very secure for the next six months.

“Our recent experience tells us that potential investors have a healthy appetite to seek out opportunities with innovative businesses, as companies have been able to obtain new equity capital.”

David Kirchin, head of Scotland at Addleshaw Goddard.