BDO finds confidence falling as firms fear for orders

THE slowing services sector is knocking the confidence of Scottish businesses, according to the latest Business Trends report by advisers BDO.

Both output and optimism have now been falling for six consecutive months, the report finds.

The optimism index, which has slid from 104.9 to 99.4 in the past 12 months, is below its long-term trend and at its lowest in more than two years.

Manufacturing is bearing the brunt, with its optimism sub-index at 87.1.

The output index – which reflects companies’ experience of orders for the coming three months – dropped from 101.7 in February to 101.3 in March.

Importantly, the services sector output index has now fallen for five months running, from 103.9 in November to 102.3 in March

Martin Gill, head of BDO in Scotland, said: “These figures show that political and economic uncertainty is affecting optimism among Scotland’s businesses.

The EU referendum, the continued difficulties faced by the oil and gas sector, and the economic difficulties being faced in the Eurozone and China are all contributing to a mood of insecurity, which is hitting investment and growth plans.”

He continued: “Our latest figures echo those from the Scottish Government, which revealed growth of only 0.2 per cent in the fourth quarter of last year, which is clearly of great concern, par ticularly as this is substantially lower than the rest of the UK.”