Scottish business optimistic despite vote to leave EU

Scottish business optimism about growth prospects over the next 12 months remains 'resilient' despite continuing Brexit uncertainty, but hiring and exports expectations are subdued, a new survey out today says.

Scottish business confidence levels are higher than the UK average. Picture: John Devlin

The research for business and financial adviser Grant Thornton’s latest quarterly international business report, involving more than 2,500 companies in 36 economies, found confidence levels in Scotland among the highest in Europe and the G7 group of advanced economies.

The average Scottish confidence level percentage was 52.8 per cent in the third ­trading quarter to September, down on the 56.4 per cent in the three previous months.

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However, it compares with a UK-wide average business confidence figure in Q3 of 45 per cent, 31 per cent in the European Union and 29 per cent in the G7. But the report says that, while macro-economic expectations remain high, “there are some signs that increasing political uncertainty is leading ­companies to take a more cautious approach to future investments”.

It reveals that only 34 per cent of Scottish companies plan to increase headcount in the coming year – 10 per cent lower than last quarter and 19 per cent down on the same quarter of 2015.

Meanwhile, only 11 per cent expect exports to increase, despite a plunge in sterling since the Brexit vote meaning favourable conditions for Scottish exporters.

Debbie Mayor, head of international at Grant Thornton in Scotland, said: “The latest set of data provides some ­reassurance during a time of great uncertainty.

“Businesses in Scotland remain resilient and focused on driving forward their growth ambitions. But, despite that positive news, there are clearly some warning signs.

“With relatively few ­companies planning to increase employment and export figures falling short of what we might expect, it’s clear we need to address some of the critical issues facing the country’s economy in the ­coming months.”

Mayor added that it remained “particularly challenging for businesses to plan ahead when potentially game changing political decisions are anticipated, from single-market access to Scottish independence”.

The Federation of Small Businesses Scotland said ­yesterday that the survey’s results largely reflected what they were hearing on the ground.

Colin Borland, head of external affairs at FSB Scotland, said: “Capital investment intentions are holding up ­relatively well, which is encouraging.

“But, regarding Brexit, nothing has actually happened yet. If you need to replace plant or machinery you are going to continue to do it.

“Hiring intentions are subdued, to say the least. Regarding exports, 77 per cent of our members do nearly all their business within Scotland.”