The Federation of Small Businesses (FSB) has called for more government support as research found a decline in business confidence in the months before the European Union referendum.
For the second quarter in a row, the FSB’s confidence index shows that the majority of small business owners in Scotland expect trading conditions to deteriorate.
The continuing decline in the oil and gas sector has been a factor over the last year, but business leaders believe uncertainty around the Brexit fallout further increases difficulty for companies.
The FSB confidence index fell to -5.5 in the second quarter of 2016, down from +28.5 this time last year. The UK figure also dropped sharply to +4.3 this quarter, compared with a high of +37.9 in the second quarter of 2015.
The study also found fewer businesses expect profits and revenues to grow, while expansion plans are down.
At a post-referendum business summit convened by the UK government, the FSB said it pressed for clarity in key areas of importance for the small business community such as access to European markets.
The business body is now calling on the Scottish Government “to deploy extra advice and help for firms grappling with the consequences of Brexit”.
Scottish policy convenor Andy Willox said: “These figures show that small business confidence was already shaky ahead of the EU vote. Now that the UK is set to leave, businesses need to know what it will mean for them in practice.
“While legally nothing has changed since last week, the markets in which businesses operate are already in motion. For example, currency fluctuations will have had a big impact on importers and exporters.
“FSB has pressed the UK government on areas of crucial importance for our members and the wider small business community.
“We’re now asking the Scottish Government to do what it can to provide clarity to business and keep a close eye on emerging issues.”
He added: “As a consequence of, among other things, the decline in the oil and gas industry and well-documented pressures on our service sector, Scottish small business confidence has been very weak for the last year.
“At the moment, it’s hard to see the current economic uncertainty making it easier for confidence to bounce back quickly.
“While most Scottish firms are simply getting on with business, that doesn’t mean that they are indifferent to the outcome or implications of the referendum.
“It is vital that the UK government makes it a priority to explain, at the very least, what is going to happen to our access to the £9 trillion single market and the free movement of people.”