BUSINESS confidence in Scotland is at its lowest level since the 2008/09 recession, research has shown. Scottish businesses recorded a confidence score of -16.4 for Q3 – the lowest score since Q1 in 2009 and significantly below the +12.9 reading of a year ago.

The latest figure is down dramatically from a score of -7.0 in last quarter’s ICAEW (Institute of Chartered Accountants in England and Wales) Business Confidence Monitor (BCM).

ICAEW says the downturn in confidence is consistent with weaker activity being reported by Scottish businesses. Turnover growth in Scotland has more than halved over the last year, to 1.7 per cent year-on-year in Q3 of 2016, from 4.2 per cent 12 months ago.

Weaker turnover growth has been accompanied by a fall in prices charged by Scottish businesses, down by 0.8 per cent over the last 12 months. With input prices remaining flat and salaries continuing to grow, at 1.3 per cent, there has consequently been a downward impact on margins. Profit growth has slowed from 3.8 per cent year on year in Q3 of 2015, to 0.9 per cent this quarter, the lowest rate of growth since Q1 in 2013. Employment levels remained broadly flat in the 12 months to Q3 2016. The growth in staff development budgets has been just 1.1 per cent year on year.

Despite this, Scottish businesses still expect growth in the year ahead, ICAEW, says albeit at a slower pace than forecast a year ago. Turnover is expected to rise by 2.9 per cent, which is significantly better than the 1.7 per cent achieved over the last 12 months, with exports predicted to grow a little faster than domestic sales (3.4 per cent and 3 per cent respectively). Export growth will be supported by the depreciation of sterling, although a weaker pound will also place upward pressure on input prices.

With prices charged to customers predicted to grow by just 0.7 per cent, Scottish businesses expect profits to grow by 2.8 per cent, half the assumption of a year ago.

ICAEW Scotland president Andrew Hewett said: “It is always disappointing to see confidence continue to fall, but caution is often to be expected in times of wider uncertainty. With the EU referendum, the Holyrood elections and talk of the possibility of another Scottish independence referendum hitting the headlines in recent months, it is not entirely surprising that businesses are circumspect in some of their expectations. It is, however, encouraging to see optimism in terms of growth for the coming year.”

Meanwhile, the latest Disposable Income Index (DII) published by savings and ISA provider Scottish Friendly has revealed that more than half (51.9 per cent) of working-age households are worried about how leaving the EU will affect their financial wellbeing.

The report, compiled in conjunction with the think-tank the Social Market Foundation, reveals disposable income remained relatively flat with a 2.4 per cent improvement overall across the UK over the last quarter, from £1,000 to £1,024.

Scottish Friendly says the increase in disposable income has been fuelled by low inflation and the continued positive impact of the National Living Wage. However, with growth expected to slow in the wake of the EU referendum result and the fall in the value of sterling, many still cite concerns about their financial well-being, despite unemployment levels remaining low.