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Research: 18 month slide in Scottish business confidence PDF Print E-mail
Wednesday, 11 January 2017
Scottish smaller business confidence fell again at the end of 2016, marking 18 months of sliding private sector sentiment, according to a new Federation of Small Businesses (FSB) report.   

The latest FSB Small Business Confidence Index shows that, UK wide, slightly more firms expect conditions to improve than deteriorate. The metric climbed from -2.9 points in autumn 2016 to +8.5 points at the end of the year. In contrast, a significant majority of Scottish smaller businesses expect conditions to worsen, with the equivalent Scottish figure falling from -18.8 points to -28.9 points.

The state of the domestic economy was highlighted as the biggest barrier to growth by more than half (55%) of Scottish firms surveyed by FSB.

Andy Willox, FSB’s Scottish policy convenor, said: “A confidence gap has opened up between firms in Scotland and elsewhere in the UK. This was clear before the referendum on the EU, but widened as 2016 wore on.

“The reasons for this divergence aren’t immediately clear. But new burdens on Scotland’s large service sector, the wider economic impact of the oil price dip and rising overheads will all have had a role to play.

“The Scottish Government has done the right thing by expanding the Small Business Bonus to give smaller firms extra rates help. But we may need to see the Finance Secretary allocate additional funds to cushion the impact of this year’s revaluation. Longer term, we need a rates system that doesn’t act as a disincentive to investment.”

According to the study, 46 per cent of Scottish firms reported that their profits fell in the last quarter of the year. In contrast, only 27 per cent said profits had increased. Problems with recruiting skilled staff and low consumer demand were also highlighted as key barriers to growth.

The research also shows weak recruitment intentions from smaller firms, with a net balance of 11 per cent of firms reporting reduced headcounts. FSB says this a key concern given that they account for the vast majority of Scotland’s business community.

Andy Willox added: “Fewer Scottish smaller firms looking to increase their staff numbers is a bad sign, especially in rural Scotland where they provide four in five private sector jobs. We’ve pressed politicians to focus on local infrastructure to give local economies a leg up.”

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