CONFIDENCE in Scottish business fell to a new low over the first three months of 2019, new figures have revealed.
The Federation of Small Businesses’ (FSB) optimism tracker showed that as Brexit uncertainty continued over the year’s first quarter, the Scottish Small Business Index (SBI) fell 1.8 points to -34.5.
In contrast, the UK index increased slightly, rising by 4.9 points to -5.0 over the same period – but this figure is still 11 points lower than during the same quarter in 2018.
This is now the second successive quarter in which the Scottish index has hit a record low – the SBI has not registered a positive reading since the second quarter of 2018.
Andrew McRae, FSB’s Scotland policy chair, said the uncertainty of Brexit was “being piled upon rising overheads, shaky revenues and squeezed margins”.
He continued: “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.”
In the first quarter of 2019, the net balance of small business in Scotland that saw costs rise over the last three months stood at 72%, up from 67% in the last quarter of 2018.
FSB research also records weak profits and revenues amongst Scotland’s smaller businesses, and finds the share of small businesses operating below capacity is on the rise.
In the first quarter of the year, a net balance of 62% reported they had operated below capacity over the last three months, 13.6 points up on the 48.5% reported at the end of the 2018.
More positively, two in five Scottish businesses (42%) reported that they planned on growing, a figure nearly in line with the UK average of 50%.
But McRae added that after nearly 1000 “wasted days”, the Government still has not warned firms what kind of Brexit they are to prepare for.
He continued: “Despite this farcical situation, business leaders must do what they can to ensure their firm is prepared for what might be to come by checking official sources of advice. UK-wide, FSB is arguing that vouchers should be provided to firms to help them prepare. It will be important to ensure that north of the Border that this support is aligned with existing help.”
McRae explained that with new tax and regulatory rules coming in next week, firms in Scotland were facing challenges – and encouraged policy makers north and south of the Border to “give smaller businesses a much needed break”.
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