Scottish business confidence remains strong, despite Brexit fears

New research from Grant Thornton’s International Business Report (IBR) has revealed business confidence in Scotland remains high, despite Brexit fears and the ongoing oil and gas downturn.

The research, which involved more than 2,500 businesses in 36 economies, found optimism among firms throughout Europe had fallen substantially in the first quarter of 2016 as the referendum on the UK’s membership of the EU approaches. Globally, business optimism has dropped to its lowest level in three years with most regions reporting a slump in confidence.

However, in Scotland, 67 per cent of businesses were optimistic about conditions over the next 12 months. While the figure is down from 72 per cent in the last quarter of 2015, it remains substantially higher than the UK average of 44 per cent and the EU average of 34 per cent.

The research also found that 61 per cent of business leaders in Scotland believe their turnover will increase in the next year, down from 76 per cent in 2015, but – once again – higher than the UK average of 51 per cent.

Meanwhile, almost half (44 per cent) of Scottish businesses questioned plan to increase employment in 2016, a decline of 8 per cent from 2015, but substantially above the UK average of 29 per cent.

Debbie Mayor, head of international at Grant Thornton in Scotland, said: “The figures are welcome news at a time of real fluctuation and volatility in global markets. However, Scotland’s economy is increasingly international in its nature and the EU-wide survey results suggest that we face a challenging year ahead.

“Perhaps unsurprisingly, the IBR research found that the UK suffered the biggest fall in business confidence of any EU nation. Although Scotland’s business community appears to have a more optimistic outlook, the rest of the UK remains our biggest trading partner, so this does cause some concern.

“Businesses around the world are being forced to deal with a potent combination of fragile financial markets, volatility in oil prices, concerns over terrorist attacks and political uncertainty, including the potential Brexit, and the US Presidential race. Such a large mix of uncertainty will naturally damage long term confidence. However, it appears that Scotland’s business community remains resilient and focused on sustainable, long-term growth in the face of growing global challenges.”