Confidence among small firms in Scotland is at its highest for a year, but is lagging behind the UK as a whole because of rising utility bills, the Federation of Small Businesses (FSB) said yesterday.
Despite the pressure, hiring intentions are at the strongest level since 2010, and the FSB also reported “tentative” signs that credit conditions were beginning to ease.
The organisation’s Scottish policy convener, Andy Willox, said credit costs were unaffordable for 56 per cent of firms, but this marked an improvement from last year, when the figure was 64 per cent, and a third of companies expect their prospects to improve during the next three months.
The report echoes similar findings from the Bank of Scotland last week, which said overall business sentiment for the second half of the year had risen to its highest level in more than five years.
Willox said: “It’s all relative and we are coming from a very difficult position, but it’s great that small businesses are feeling more confident and getting ready to expand their workforce. But we can’t get carried away. Capital investment is also a key driver of growth, but the number of small businesses planning to make this sort of significant purchase has fallen.”
According to the FSB, only 8 per cent of respondents plan to embark on capital investment this year, down from 10 per cent a year ago. The organisation’s quarterly survey also found that 58 per cent of small companies had been hit by higher utility bills, compared with the UK average of 53 per cent.