BUSINESS confidence in Scotland fell in the last six months, according to the latest Business in Britain report from Bank of Scotland, based on data gathered after the snap General Election had been called.
The confidence index – an average of respondents’ expected sales, orders and profits over the next six months – fell slightly to 19 per cent, from January’s score of 21 per cent.
The report, now in its 25th year, gathers the views of more than 1500 UK companies, predominantly small to medium-sized businesses, and tracks the overall “balance”
of opinion on a range of important performance and confidence measures, weighing up the percentage of firms that are positive in outlook against those that are negative.
Scottish business confidence fell slightly compared with England and Wales where confidence has increased by 10 points to 24 per cent since January.
The confidence index calculates the net balance – the difference the percentage of firms that are positive in outlook against those that are negative. It can vary between -100 if all firms are negative and +100 if all firms are positive. Fraser Sime, regional area director for SME, Bank of Scotland, said: “Overall confidence in Scotland has decreased slightly since our last survey in January but remains positive.
“The fact that it remains only slightly lower than at the start of the year, despite the political uncertainty from a snap election, is a positive sign for underlying confidence in the region and is testament to the resilience of Scotland’s business owners.”
The proportion of Scottish firms that said that they had experienced difficulty in recruiting skilled labour in the last six months, however, increased to 45 per cent, compared with 34 per cent in January.
The share of firms reporting challenges in recruiting unskilled labour also rose to 24 per cent from 16 per cent.
Amid recruitment challenges, the net balance of firms expecting average pay to rise in the next six months rose by seven points to 21 per cent from 14 per cent.
Sime added: “Despite hurdles in recruiting both skilled and unskilled labour, Scottish businesses also anticipate sales, profits and staffing levels to rise. The outlook for the external environment remains mixed, with details of Britain’s exit from the EU still to come but businesses have been working within those parameters for a while now. For the moment, Scottish businesses are taking this in their stride until there is a clearer sense of what it will mean for them in the short and medium term.”
Scottish companies remained positive about export prospects, but less so than in January.
The net balance of firms in the region expecting higher total exports in the next six months stood at 30 per cent, down from 55 per cent at the start of the year. They were most upbeat about export prospects to the US and Canada, followed by Europe and Africa.
Hann-Ju Ho, senior economist at the bank, said: “Although the pound’s value is seen as nearer ‘fair value’, currency volatility remains a big concern for some UK businesses that trade internationally.
“We have already seen some significant currency moves after the General Election.”
A report published last week by the Federation of Small Businesses (FSB) showed that Scottish business confidence had risen for the second consecutive quarter.
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