Scottish business confidence down 2% since start of 2017

Business confidence in Scotland has fallen over the last six months to become lower than that in England and Wales.

Scottish business confidence is down. Picture: John Devlin

The Scottish index dropped from 21% in January to 19% in June, while the rest of Great Britain grew by 10 points to 24% during the same period.

Now in its 25th year, the Business in Britain report tracks the overall “balance” of opinion on a range of important performance and confidence measures.

Fraser Sime, regional area director for SME, Bank of Scotland, said: “Overall confidence in Scotland has decreased slightly since our last survey in January but remains positive.

“The fact that it remains only slightly lower than at the start of the year, despite the political uncertainty from a snap election, is a positive sign for underlying confidence in the region and is testament to the resilience of Scotland’s business owners.”

Overall, the share of Scottish firms naming economic uncertainty fell slightly to 22% from 24%, while those citing weaker UK demand edged higher to 14% from 12%.

The proportion of businesses in Scotland saying they had experienced difficulty in recruiting skilled labour in the last six months grew to 45%, compared with 34% in January.

Firms reporting challenges in recruiting unskilled labour also rose to 24% from 16%.

Despite recruiting challenges, the net balance of firms expecting average pay to rise in the next six months rose by seven points to 21% from 14%.

Mr Sime added: “Despite hurdles in recruiting both skilled and unskilled labour, Scottish businesses also anticipate sales, profits and staffing levels to rise.

“The outlook for the external environment remains mixed, with details of Britain’s exit from the EU still to come but businesses have been working within those parameters for a while now.

“For the moment, Scottish businesses are taking this in their stride until there is a clearer sense of what it will mean for them in the short and medium term.”

The net balance of firms in Scotland expecting higher total exports in the next six months stood at 30%, down from 55% at the start of the year.

Scottish companies were most upbeat about export prospects to the US/Canada, followed by Europe and Africa.

Hann-Ju Ho, Bank of Scotland senior economist, said: “Although the pound’s value is seen as nearer ‘fair value’, currency volatility remains a big concern for some UK businesses that trade internationally. We have already seen some significant currency moves after the general election.”

Views of 1,500 UK companies, including 124 Scottish businesses, were taken for the report and were predominantly small to medium-sized enterprises.

A fifth of the responses came from businesses with an annual turnover below £1 million.