Confidence plummets as small firms face rising costs
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The latest index from the Federation of Small Businesses (FSB) found business optimism in Scotland fell to -15.2 points in the third quarter of the year, from -3.8 points in the previous three months.
Over the same period, the equivalent UK figure dropped 13.9 points to +1 point.
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Hide AdFSB Scottish policy convener Andy Willox said: “Businesses in Scotland have been pessimistic about prospects for the last seven quarters. While we saw a slight uptick earlier this year, this quarter business confidence in Scotland, and across the UK, has taken a hit.
“Rising inflationary pressure and a weakening domestic economy are the twin drivers of plummeting confidence among UK businesses.
“Scottish small firms will be looking to the Chancellor to extend a lifeline at the Budget. In such a difficult trading environment, new tax grabs and loss of reliefs for entrepreneurs will exacerbate existing challenges.”
The survey found a net balance of 7 per cent of Scottish smaller firms reporting a fall in gross profits, with a higher proportion of firms warning that input costs, such as the price of raw materials, are a barrier to business growth.
“The depreciation of Sterling is still having a big impact on those firms which import goods or services, or who are part of international supply chains,” Willox added.
However, a net balance of 7 per cent of small businesses also plan to increase their investment in the next quarter, up from 6 per cent earlier in the year.
• READ MORE: Small firms say EU trading a priority after Brexit
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Hide AdThe FSB in Scotland has called for measures to cushion the impact of Brexit on Scottish businesses.
Willox said: “It is critical that agreement with the EU27 is now reached on issues such as the length and nature of a transitional deal.
“We would argue that a three-year interim period would be sensible, alongside a comprehensive free trade agreement. Further, EU citizens working in or running businesses in Scotland must have the right to remain in the country.”