Scottish business confidence hits record low for second quarter running

Confidence in Scottish business fell to a new low in the first quarter of 2019, according to new figures.

The Federation of Small Businesses’ (FSB) latest optimism tracker index fell 1.8 points to -34.5.

This is the second quarter in succession that confidence has hit a record low.

In contrast, the UK Index recovered slightly, rising by 4.9 points in Q1 to -5.0, though this figure is 11 points lower than at the same point in 2018.

Andrew McRae, FSB’s Scotland policy chair, said: “Uncertainty associated with Brexit is being piled upon rising overheads, shaky revenues and squeezed margins.

“It’s hardly surprising that Scotland’s firms aren’t brimming with confidence.

“Again, Scottish entrepreneurs are particularly gloomy compared to the UK average.

“This could be due to the sectoral make-up of the Scottish economy, or how we view the prospect of the UK leaving the EU.

“Either way, even if we avoid the nightmare of a no-deal, no-transition Brexit, there’s much work to do to give Scottish business decision-makers the confidence they need to grow our economy.”

The Scottish index has now not registered a positive reading since the second quarter of 2018.

In Q1 2019, the net balance of small businesses in Scotland that saw costs rise over the last three months stood at 72%, up from 67% in Q4 2018.

The research also records very weak profits and revenues among Scottish smaller businesses, while the share of them operating below capacity is on the rise.

In the first quarter of 2019, a net balance of 62% reported that they operated below capacity over the last three months, 13.6 points up on the 48.5% recorded in Q4 2018.

However, 42% of Scottish businesses intend to grow over the next year, a figure only slightly below the UK average of 50%.

Mr McRae added: “After nearly a thousand wasted days, Scotland’s small businesses still don’t know what sort of Brexit for which they’re preparing.

“Despite this farcical situation, business leaders must do what they can to ensure their firm is prepared for what might be to come by checking official sources of advice.”