OVER one third of small to medium-sized firms in Scotland have put recruitment plans on hold and nearly one half expect costs to rise as a result of the Brexit vote.

Scottish SMEs are also less confident about the future than others in the rest of the UK following the vote to leave the EU, according to a new survey.

It found that 66 per cent of Scottish firms feel ensuring that sufficient liquidity is maintained within the UK financial markets to be a major concern, compared to 52 per cent at a UK level, and that Scottish firms are “much less likely” to make capital investments – 24 per cent compared to 15 per cent at the UK level.

Only 22 per cent have plans in place to drive growth in light of the EU referendum compared to 38 per cent across the UK.

Scots are also more likely to want EU savings ploughed into transport infrastructure (54 per cent against 48 per cent) than digital infrastructure improvements (17 per cent against 29 per cent).

Across the UK, the SMEs agree that access to the EU Single Market and negotiating trade deals with non-EU countries should be the Government’s main priorities as it negotiates the EU exit.

While Scottish SMEs see market access and trade as government priorities, only 25 per cent think the UK Government should prioritise environmental legislation and emission targets, with 34 per cent believing that setting immigration targets should be a government priority. Additionally, 39 per cent say the Government should prioritise support for exporters to trade outside the EU.

Germany would be the top priority market for 59 per cent of Scottish SMEs with the next preferred export markets – France and Ireland – lagging well behind at eight per cent each. Overall 48 per cent expect Brexit to increase their cost-base, while only 36 per cent expect to recover this through price increases.

Peter Kelly, of PWC’s My Financepartner (MFP) who carried out the survey, said the absence of reliable or appropriate management information will not help SMEs make decisions that are right for them. “Our survey paints a picture of SMEs largely united in urging government to maintain the status-quo in terms of access to the single market, to open up new markets and to support companies as they realign export activities,” he said.

The MFP survey found that across the UK maintaining access to the single market was particularly important for companies in manufacturing (68 per cent), retail (62 per cent), IT (74 per cent) and media (69 per cent). Generally, the bigger the company as measured by turnover, the greater the importance of retaining single-market access. Companies in London and the South East were particularly anxious to retain EU single-market access post-Brexit (74 per cent and 72 per cent) as were 73 per cent of Scottish SMEs. In the pro-Brexit heartlands of the Midlands, only 53 per cent saw this as a priority.

Peter Kelly added: “What’s worrying here is that, while most companies have clear views about what they want in terms of market access and government priorities, when it comes to strategy, pricing and management information, there is much less confidence and certainty. The imbalance between cost and prices will squeeze margins and reduce productivity while the lack of confidence in internal management information systems could leave companies unable to make informed choices.”