Figures published today by the Federation of Small Businesses (FSB) showed a fall in its Scottish Small Business Index (SBI) report which measures optimism. The drop mirrored a similar slide in UK-wide figures.
FSB’s Scotland policy chair Andrew McRae said: “All eyes will now be on next month’s UK Budget to see what the new Chancellor delivers for small firms.
“Action on the debilitating impact of late payments would be a great place for him to start. We also need early reassurance that employers will see a practical post-EU immigration system that works for businesses of all sizes..
“At Holyrood, where we have recently seen common sense on business rates prevail, the Scottish Government now needs to focus on moves to rejuvenate our towns and high streets, get more empty units back into use and support the growth potential of our migrant entrepreneurs.”
In the final quarter of 2019, FSB’s SBI showed a fall by 13.7 points to stand at -27.2. Across the UK, small business confidence fell 13.5 points to -21.6.
At the same time, a net balance of 12.9 per cent of small businesses in Scotland reported falling profits. This is down on the 12.1 per cent negative balance seen in Q2, when the question was last asked.
'We need to act'
“When you look at the turbulent political landscape and the uncertainty about the post-transition trading environment, it’s no wonder confidence has taken a hit,” said McRae.
“We’re not back down at the record lows we saw earlier in 2019, but we’re seeing rising spare capacity and depressed hiring intentions, so we need to act.”
The report also reveals that small businesses were unable to maintain employment growth in Q4, with 4 per cent more laying staff off than taking them on, representing a negative swing of 9.2 percentage points compared to Q3.
Looking ahead, a net balance of just 0.8 per cent of Scottish small businesses plan to hire new staff in the next 12 months.
The share of small businesses in Scotland operating below capacity has also risen for the second consecutive quarter. In Q4, the proportion of Scottish small businesses operating below capacity was 58.1 per cent, an increase of 4.8 per cent compared to the previous quarter. Only 11.3 per cent of small businesses were operating above capacity over the same period.
The FSB surveyed 1,029 small businesses for the report, including 125 from Scotland.
Scotland’s economy is forecast to grow by 1 per cent in 2020 with experts saying Brexit remains a risk to the economy.
The prediction came in the Scottish Fiscal Commission’s range of economic forecasts published alongside the Scottish Government’s budget.