Scottish small business confidence at three year low

The small business campaign group’s research suggests that this fall in business confidence may be due, in part, to the decline in the oil and gas industry filtering through to the wider economy.

The FSB’s confidence index now stands at +0.3 points, down from +4.6 points at the same time last year, and markedly below the UK figure which stands at +21.7 points. Though the weakest reading since the start of 2013, it suggests that Scottish small businesses expect the trading environment to remain about the same, rather than improving or getting worse.

Despite the fall in confidence, a net balance of 15 per cent of Scottish small firms reported that revenues rose in the last three months of 2015. However, a balance of just 3 per cent of businesses in Scotland expect to see their profits rise in the first quarter of this year.

A balance of about a fifth (19 per cent) of firms plan to increase investment over the year ahead. This compares to a quarter of businesses a year ago, and about three in ten at the start of 2014.

FSB’s Scottish Policy Convenor, Andy Willox, said: “The creeping gap between Scottish small business confidence and the UK average is a cause for concern.

“Many analysts have highlighted the impact of the falling price of crude on Scotland’s oil and gas industry. As you might expect, this decline looks to be having an impact on the local economies dependent upon this trade. Our researchers also suggest that pressure on public sector budgets may be flowing through to private sector confidence.

“Firms face a lorry load of regulatory changes in 2016 – such as new pension requirements and the changes to the minimum wage. Many members tell us that they’ve revisited their business plans as a consequence of these changes. Decision-makers in Edinburgh and London need to be sensitive to the cumulative impact of challenges that small businesses now face.

“In the long term, our objective must be to create resilient Scottish local communities whose strength comes from economic diversity. We cannot allow more places and economies become perilously dependent on a single industry or large private or public employer. Developing resilient local economies must be the key focus of debate at this year’s elections.”

Last week, official statistics revealed that the Scottish economy grew 0.1 per cent for the period July to September 2015, compared to 0.4 pr cent across the UK.