Smaller businesses report ‘big fall’ in confidence

The figure is still in positive territory and higher than at this point last year. Picture: Craig Stephen
The figure is still in positive territory and higher than at this point last year. Picture: Craig Stephen
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Scottish small business confidence took a “big fall” this quarter despite evidence that sales are still growing, new figures from the Federation of Small 
Businesses (FSB) show.

The group’s “voice of small business index”, published today, shows that sentiment among firms north of the Border slumped 18 points to stand at +26 and is now below the UK average.

The figure is still in positive territory and higher than at this point last year, while the report also highlights growing revenues and falling levels of spare capacity in Scottish small enterprises.

Andy Willox, the FSB’s Scottish policy convenor, said: “Scottish small business confidence has been on a broadly upward trajectory and we need to remember that we’re still in positive territory.

“But a big fall like this highlights why we keep our finger on the pulse of Scotland’s small businesses and make sure our members get a fair deal.

“While Wales and some English regions saw similar dips, we need to understand if this fall is a one-off blip or marks the start of a trend.”

He said many firms were now working at capacity, and it was important that a proportion of any extra workload turns into new jobs and growing businesses.

He added: “We have also seen hiring intentions cool, underlining the need to make it easier for small firms to employ and retain staff.”

Just a third of Scottish businesses reported running below capacity this quarter, continuing a downward trend over the course of 2014. The report shows a decreasing proportion of firms are reporting rising overheads and fewer reporting that finance is unaffordable.

The FSB’s headline statistic is based on research showing that, while 45 per cent of Scottish firms expect their prospects to improve over the next three months, 19 per cent expect them to deteriorate. In comparison, the UK index rose by 2.3 points this quarter, from +39.7 points to +41 points.

It comes as the latest report on jobs from the Bank of Scotland shows the labour market continued to go from strength to strength in August. The report, also published today, shows further marked gains in placements during the month, as well as strong pay growth amid rising demand for staff.

Latest data meanwhile showed the most marked deterioration in permanent candidate availability in the survey’s 
history, a further sign of increasing 
tightness in the jobs market. Donald MacRae, chief economist at Bank of Scotland, said: “August’s barometer returned a strong reading showing a rising number of people appointed to both permanent and temporary jobs.

“The economic recovery continues with business confidence remaining high.”

And the latest figures from the Scottish Retail Consortium (SRC) showed shopper numbers on high streets, shopping centres and retail parks increased by 1.8 per cent last month, compared to August 2013.

The figure was down on the 4.4 per cent rise seen in July, but was considerably better than the fall of more than 1 per cent recorded for the UK as a whole.

SRC director David Lonsdale said: “Footfall has risen for four of the last five months, though this doesn’t always 
necessarily translate into increased levels of actual sales.”