Scots lead way for small business performance

SCOTTISH small and medium-sized enterprises have outperformed their counterparts in the English regions, according to a new report by the Small Business Research Trust (SBRT).

The quarterly survey, conducted by the management school of the University of Liverpool, reveals Scottish businesses consistently reporting higher increases in sales, employment and investment than their English counterparts throughout 2005.

Andy Mowlah of the SBRT called the findings "robust" and said: "This looks fantastic for Scotland. Everyone has same regulatory burden, so either business in Scotland is marketing itself better or consumer sentiment there is stronger."

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The report, prepared with the support of the Forum of Private Business and HSBC, was widely welcomed by Scottish officials and business groups yesterday.

Graham Bell, of Edinburgh Chambers of Commerce, called the report "solid evidence of the healthy direction of SMEs in Scotland".

He added: "This is independent research which reflects Scotland's attractiveness as a place to do business. It suggests how business here has been forced to get leaner and fitter. As major employers in sectors like electronics have decamped to cheaper locations, the onus has been on Scottish business to find new knowledge-economy jobs."

Niall Stuart, of the Federation of Small Businesses, said that the positive figures corroborated recent statements from the Office of National Statistics, which showed Scottish GDP growth rate inching ahead of the UK's last autumn.

"It may be that the more cyclical economy of the south-east slowed down, and taking a 0.1 or 0.2 of a per cent lead is not going to be enough to close the historical underperformance. It's a hopeful sign, though the challenge remains for the Executive to close the long term gap."

The SBRT report is the largest survey of SMEs in the UK, carried out four times a year by Liverpool University.

It shows that, in 2005, an average of 14.25 per cent more Scottish than English businesses reported sales that were up rather than down. Each quarter showed more businesses reporting increased rather than decreased sales. Employment fluctuated over the year, but on average 6 per cent more businesses reported employment increases.

The final quarter of 2005 recorded 10 per cent more businesses saying employment had grown rather than declined. Investment was up in every quarter, with an average of 8.5 per cent more businesses saying it had increased rather than decreased.

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Small businesses in Wales reported marginally better results in sales and investment than Scotland, but overall employment showed little change.

In his foreword to the report, the SBRT chairman, Brian Wolfe, challenged the government to lift the burden of regulation and taxation on small businesses: "When reviewing challenges to growth, tax and employment regulations have consistently been the main barriers."

A spokesman for the Enterprise ministry of the Scottish Executive welcomed the figures, saying: "SMEs are a crucially important part of Scotland's economy and the Executive, through the Enterprise Networks, continues to encourage and support their growth through such mechanisms as the Business Growth Fund and Scottish Co-investment Fund. These play a key role in addressing gaps in the market and helping many young firms realise their growth potential."

Winners and losers

BASED on consultation with 4,000 businesses over the course of the year, the SRBT final survey shows an overall picture full of sharp contrasts in sectoral confidence. The wholesale and retail sector had a markedly difficult year, with 27 per cent more businesses reporting a decline in the final quarter. Hotels and restaurants reported increases, as did manufacturing, where sales and investment figures were up for every quarter of the year. Scotland apart, the employment picture was largely negative: only in the last quarter have businesses reporting increases in staffing outweighed those cutting staff, and then only by 6.5 per cent.