Scottish business losing its gloss as optimism plummets

By DOMINIC JEFF
Published on Wednesday 7 December 2011 00:00

OPTIMISM among Scottish businesses has collapsed in the past quarter, sending them to the bottom of the latest UK confidence table.

Three months ago Scotland topped the UK Business Confidence Monitor with a robust +17.6 rating, but factors such as sluggish economic growth and falling demand have pushed that figure down to -14.1.

The sharp fall for this quarter is matched by a downward revision in growth expectations from Scottish businesses, with turnover growth of just 4.9 per cent forecast for the next year.

Forecasts for annual growth had generally been on the increase since mid-2009, and reached a high of 7.6 per cent last quarter.

Shelah Dutta, Scotland chairman of the Institute of Chartered Accountants in England and Wales which undertakes the survey with Grant Thornton, said that while the downturn in confidence was a worrying trend, it was not surprising. “Factors such as sluggish economic growth, decreasing demand and continued concerns relating to tax burdens seem to have taken their toll and are impacting dramatically on business confidence,” she said.

The UK-wide confidence index had also fallen in the current quarter, to its lowest level since 2009, “indicating that businesses in Scotland are not alone in feeling that there are possibly darker days ahead.”

The survey also revealed that export expectations fell for a second consecutive quarter as the ongoing sovereign debt crisis in the eurozone continued to affect the UK’s largest foreign market.

Although exports are still expected to grow, the forecast has weakened in Scotland to a 4.2 per cent rise in the next 12 months, down 1.3 per cent on last quarter’s forecast – 7.1 per cent growth had been expected in the 12 months from July.

These concerns are likely to be compounded by the lacklustre pace of economic growth in 2011 to date; the Scottish economy grew at a quarter-on-quarter rate of only 0.1 per cent in the second quarter of the year, down from 0.2 per cent in the first quarter of the year.

Grant Thornton’s managing partner in Scotland, Andrew Howie, said businesses needed support if they were to withstand potential storms ahead.

He said it would be interesting to see if the Chancellor’s Autumn Statement could have a stabilising effect on the economy and welcomed the pledge to improve lending via the National Loan Guarantee Scheme.

“News of a new tax-advantaged venture capital scheme will be welcomed by businesses with the opportunity to grow,” he added.

The survey comes as figures from Scottish Enterprise (SE) show businesses the organisation has been supporting had been enjoying an improving growth trend earlier this year.

In a review of its account managed companies, which have been picked for their high growth potential and are therefore not representative of the wider business population, SE said 63 per cent increased their turnover in the three months to September, while nearly half grew operating profits and 43 per cent took on staff.

All those areas showed upwards trends over the previous year. A large positive balance of those firms also reported increasing exports.

However, the period covered by the report pre-dates a series of major downgrades to economic forecasts for both the UK and the eurozone, with most economists now predicting only meagre growth next year.

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The Answer

Wednesday, December 7, 2011 at 03:55 PM

It seems scotlands only growth industry and punching above weight in scotland boils down to consuming as much benefit as possible from the social security system.from a written reply at Westminster: "Crisis loans for 2007-08 for Great Britain Jobcentre Plus Social Fund budget area (ordered by region)"............................... £91 million ... England............................................................................. £20 million ... scotland.............................................................................. £6 million Wales...................................................................................... http://www.theyworkforyou.com/wrans/?id=2009-03-24f.253662.h&s=%22crisis+loans%22+scotland#g253662.r0

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A Thouroughly Decent Bloke

Wednesday, December 7, 2011 at 02:07 PM

Three months ago Scotland topped the UK Business Confidence Monitor with a robust +17.6 rating, but factors such as sluggish economic growth and falling demand have pushed that figure down to -14.1. ------------------------------------------------------------------------You mena they have a mesure of how happy business people are feeling? In Scotland, that's like measuring a mountain from the top iwht a length of string - it only goes down!

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5

Knowing too much

Wednesday, December 7, 2011 at 12:39 PM

4, Saltire. If you're concerned for Scotland's future, give all the time you can spare to campaigning for independence, and the prosperous Scotland which will ensue thereafter. If there is any genuine 'uncertainty', it is felt only by those unionists who, by any dishonest or foul means they can employ, would keep Scotland poor and within the Union, either to satisfy an unsavoury Billy-boy Britnat bigotry, or in the hope of advancement within the English establishment.

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4

Saltire

Wednesday, December 7, 2011 at 11:14 AM

I do business around the UK and overseas. Main difference between Scotland and the rest (apart from a bloated public sector) is growing uncertainty over our political future. Time for a referendum to put this to bed and let businesses get on with creating jobs.

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3

wee-scamp

Wednesday, December 7, 2011 at 10:28 AM

The new venture capital scheme will only work if peoplecompanies actually put money into it. So far we've a lousy record at doing that.

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2

ConnorMacLeod

Wednesday, December 7, 2011 at 08:20 AM

Personally I blame the press for most of our woes. If they tell people time will be tough, the people stop spending, the economy shrinks and times are tough - tax revenues go down and more spending cuts are needed. If the press talked up the grass roots people would spend, the economy would grow and we'd all be laughing.

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1

The Answer

Wednesday, December 7, 2011 at 01:16 AM

TABLE 3.1 - COUNT OF ACTIVE ENTERPRISES for 2010. . . . . . Business Demography 2010. . .(data released 6-12-2011). . . . . . . . 2,001,885. . . ENGLAND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403,080. . . LONDON. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369,920. . . SOUTH EAST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233,090. . . EAST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228,245. . . NORTH WEST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212,885. . . Inner London. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202,620. . . SOUTH WEST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190,195. . . Outer London. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186,150. . . WEST MIDLANDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163,210. . . YORKSHIRE AND THE HUMBER . . . . . . . . . . . . . . . . . . . 153,615. . . EAST MIDLANDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151,320. . . scotland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88,170. . . WALES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,955. . . NORTH EAST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,980. . . NORTHERN IRELAND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . http://www.ons.gov.uk/ons/rel/bus-register/business-demography/2010/business-demography-2010.xls

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