Scottish firms '˜resilient' despite fall in confidence

Confidence among Scotland's business community remains 'resilient', with 50 per cent of firms forecasting a rise in profits this year, a report today suggests.

Just 11% of Scottish firms are looking to increase exports this year. Picture: Contributed

Senior decision makers north of the Border were among thousands of business leaders in 36 economies who were asked for their views during May and June.

The research from accountancy firm and business adviser Grant Thornton reveals a drop in general confidence levels in the run up to the EU referendum – echoing the findings of similar business surveys.

Despite the threats posed by Brexit and continuing uncertainty over oil and gas prices, half of all Scottish respondents believe their profits will increase this year. The figure represents a slight drop from the first quarter of this year, but remains well above the global average of 36 per cent. Meanwhile, 56 per cent of Scottish companies are optimistic about wider economic conditions over the next 12 months – higher than the eurozone average of 35 per cent.

On employment prospects, 44 per cent of Scots firms plan to increase staff numbers in the coming months – more than any other part of mainland Britain – according to the latest International Business Report data.

While the study paints a generally positive picture from Scotland, there are some areas of concern, including exports. Just 11 per cent of Scottish businesses are looking to increase exports this year, down from 14 per cent last quarter and below the global average of 15 per cent.

Debbie Mayor, associate director of advisory at Grant Thornton in Scotland, said: “The data provides some reassurances about the resilience of the Scottish business community.

“However, it’s important to remember that the research was conducted before the Brexit result, which has had a major impact on the global economic outlook.

“The next quarter’s data should provide us with a clearer idea of just how significant the impact of the Brexit result has been for Scottish confidence levels.”

She added: “The decline in export prospects already provides a hint that Scottish companies have been getting increasingly nervous about global trading conditions, and potentially over-reliant on domestic sales.”

A survey published on Monday by rival accountancy practice BDO showed business optimism and output in Scotland sliding to a three-year low while hiring intentions hit a two-year nadir.

The report stated that while some of this could be put down to the uncertainty surrounding the EU referendum, confidence had been in decline for a year indicating “more deep rooted problems with the economy”.

Business optimism – which predicts growth six months ahead – fell to 98.9 in June, compared with a reading of 103.9 a year earlier, the BDO report noted.