Scots entrepreneurs positive as economy grows and SME lending returns to upwards trend

The data showed banks increased SME lending by £106 million net of repayments last month, marking the fourth monthly increase this year, following a £304m fall in lending to SMEs in April.

The return to the year’s trend will boost hopes that smaller firms are beginning to benefit from the improvement in credit conditions that bigger firm have already been enjoying.

And the good news was reinforced today as it was announced that the UK economy grew faster than previously estimated in the first three months of the year.

The Office for National Statistics (ONS) said the economy grew by 0.4 per cent in the quarter, compared with an earlier estimate of 0.3 per cent.

Growth was boosted by a better performance from the construction industry than previously estimated.

On an annual basis, the economy grew by 2.9 per cent from the first quarter of 2014, up from a previous estimate of 2.4 per cent.

The figures were published as a separate study, the Growth Climate Index produced by the Business Growth Fund, a new indicator of business confidence based on the opinions of directors working across the UK’s faster-growing small and mid-sized businesses, revealed that two-thirds of Scottish entrepreneurial businesses expect conditions for growth to improve in the coming quarter.

However, concerns over the possibility of a second independence referendum meant positive sentiment north of the border lagged behind the UK-wide figure of 78 per cent.

The survey found 85 per cent of Scottish respondents felt another vote would be bad for British business, a view shared by 79 per cent throughout the UK.

Around four-fifths of the directors everywhere believe the UK’s membership of the European Union is good for businesses.

The survey also found that the state of the economy is the biggest worry for entrepreneurs in Scotland, with 22 per cent citing macro-economic factors – such as the price of oil – as their main concern, compared with 15 per cent for the UK as a whole.

Recruiting staff with the right skills was the main challenge for 21 per cent of Scots, compared with 27 per cent across the UK, while access to finance was the biggest worry for 17 per cent in both Scotland and the UK.

Upgrading infrastructure ranked first among issues that need to be prioritised by the government, followed by a desire to see simplified employment policies and an improvement in the quality of apprenticeships to make them more attractive to businesses and young people.