Scottish business confidence stabilises, but remains below UK and Eurozone average

Confidence levels within Scotland’s business community have stabilised, but remain below the UK and Eurozone averages, according to Grant Thornton’s International Business Report.

The findings, from the global business and financial advisor’s most recent quarterly survey suggest 15 per cent of Scottish business leaders are confident about trading conditions over the next 12 months. The figure is modestly higher than the final quarter of 2016 (14 per cent) but remains substantially below the Eurozone and UK, at 39 per cent and 20 per cent respectively.

Meanwhile, half of all Scottish business leaders questioned are confident that turnover will rise in the next year, down from 65 per cent last quarter.

An average of 50 business leaders from a wide range of sectors and company sizes throughout Scotland are questioned every quarter as part of Grant Thornton’s global survey of more than 2,600 businesses in 36 economies. The International Business Report’s Quarterly Survey aims to take a snapshot of economic conditions locally, regionally and globally, to offer some insight into the challenges and opportunities that lie ahead over the coming year.

This quarter’s data reflects the ongoing challenging economic and political conditions facing Scotland as uncertainty remains over the country’s future within both the United Kingdom and the European Union.

Debbie Mayor, head of international at Grant Thornton in Scotland, said: “The latest data is a fair reflection of current conditions in the Scottish marketplace. There is a sense of fatigue with the current political deadlock, but also a real resilience and commitment to continue to grow sustainably, despite the challenges that lie ahead.

“What the Scottish marketplace really needs is clarity from political leaders. The country depends heavily on access to the single marketplace for everything from exporting to employing skilled EU workers. A potential hard Brexit throws this into doubt, but a clear action plan that places collaboration and sustainability at its heart to mitigate some of the potential long term damage.”

Globally, confidence levels appear to be on the rise, with 49 per cent of businesses optimistic about the future – up from 38 per cent in 2016. Meanwhile, despite Brexit and the rise of Euro-sceptic political movements in various countries, the EU’s optimism levels, while below the world average, have also risen, from 34 per cent to 39 per cent. In the US, a complex picture has emerged following the election of Donald Trump. Expectations for revenue and profitability among American businesses have fallen from 58 per cent to 52 per cent and from 55 per cent to 52 per cent respectively. But, general confidence levels have risen substantially from 38 per cent to 49 per cent.

Francesca Lagerberg, global leader at Grant Thornton, said: “As the world’s largest economy, US business confidence sends a shot of positivity throughout the global market. It’s encouraging, therefore, to see that close neighbours and countries with strong trade links are also riding a new wave of hope. But, clearly US businesses are not yet seeing or expecting this to result in bottom line change over the short term. Businesses await follow-through on promises relating to spending, de-regulation and tax cuts, while stock markets continue to react to daily policy developments.”