Scotland’s smaller businesses least confident in UK

Latest FSB Scotland optimism tracker index falls further 1.8 points to -34.5

By Confidence among small businesses north of the Border, the engine room of the Scottish economy, has slumped to a new low.

The latest optimism tracker index from the Federation of Small Businesses (FSB) fell almost two points to -34.5, marking the second quarter in succession that confidence has hit a record low.

In contrast, the Uk-wide index picked up slightly, rising 4.9 points in the latest quarter to -5, though this figure is 11 points lower than at the same stage last year.

The FSB report echoes the findings of the Bank of Scotland Business Barometer earlier this week, which noted that confidence in Scotland had fallen eight points in March bucking the UK trend for more positive sentiment.

Andrew Mcrae, FSB’S Scotland policy chair, said: “Uncertainty associated with Brexit is being piled upon rising oververy heads, shaky revenues and squeezed margins. It’s hardly surprising that Scotland’s firms aren’t brimming with confidence.

“Again, Scottish entrepreneurs are particularly gloomy compared to the UK average. This could be due to the sectoral make-up of the Scottish economy, or how we view the prospect of the UK leaving the EU.

“Either way, even if we avoid the nightmare of a no-deal, no-transition Brexit, there’s much work to do to give Scottish business decision-makers the confidence they need to grow our economy.”

The FSB surveyed 1,094 small businesses between 6 February and 20 February for the index, including 119 firms from Scotland.

The Scottish index has now not registered a positive reading since the second quarter of 2018. In the latest period, the net balance of small businesses in Scotland that saw costs rise over the last three months stood at 72 per cent, up from 67 per cent in Q4 2018.

The research also records weak profits and revenues among smaller businesses, while the share of them operating below capacity is on the rise.

In the first quarter of 2019, a net balance of 62 per cent reported that they operated below capacity over the last three months, up on the 48.5 per cent recorded in Q4 2018.

However, 42 per cent of Scottish businesses intend to grow over the next year, a figure only slightly below the UK average of 50 per cent.

Mcrae added: “After nearly a thousand wasted days, Scotland’s small businesses still don’t know what sort of Brexit for which they’re preparing.”

UK economic growth slowed in the final quarter of last year, making 2018 one of the weakest years since the financial crisis, official figures yesterday revealed.

Uk-wide gross domestic product (GDP) was just 0.2 per cent higher in the final quarter of last year, the Office for National Statistics (ONS) confirmed.

The unrevised figure shows that the UK’S GDP grew by 1.4 per cent in 2018, compared with 1.8 per cent in 2017.

sreid@scotsman.com