Small business survey shows ‘rising confidence’

Andy Willox, outside the Federation of Small Businesses in Berkley Street, said: This is good news for unemployed Scots and for the recovery" Picture: TSPL

Half of the businesses surveyed expected prospects to improve over the next three months, compared with just 12% which predicted a deterioration, according to analysis from the Federation of Small Businesses (FSB).

It also found that, as spare capacity in small business falls, recruitment intentions are at their highest level since the research began in the first quarter of 2010.

The FSB’s latest Voice of Small Business Index, a measure of confidence, rose by eight points in Scotland during the second quarter of this year - and was more than four points above the UK average, which also experienced an increase over the first quarter.

The report said the findings suggest firms have plans to grow, with demand high enough to support expansion.

The number of Scottish firms reporting that they are running below capacity fell from 52% at the start of the year to 46% this quarter.

Figures revealed a balance of 15% of small businesses expected to increase staff numbers in the next three months.

The FSB’s Scottish policy convener, Andy Willox, said: “This is good news for unemployed Scots and for the recovery - as is the fact that one in five businesses plan to increase capital investment this year. More businesses placing orders with suppliers means more full order books, more materials to be sourced and more staff to be hired. That is the key to rebuilding our economy.

“No matter how confident we are, though, none of this investment will happen without finance. Although the position has improved since this time last year, it has hardly moved in the last three months.

“We’ll need to keep a close eye on this trend and ensure things don’t start to slip back. Having worked so hard to build a recovery, we can’t have it stifled by a lending market which lacks our members’ ambition.”

Some 37% of those asked said they expected revenues to increase over the next quarter, with 26% anticipating higher profits in the coming year. Furthermore, 19% plan to increase capital investment over the next year, compared with 8% at this point in 2013.

Responding to the report’s findings, a Scottish Government spokesman said: “The Scottish Government is committed to supporting businesses, a key part of this is ensuring businesses can access good quality, consistent business support both to help them start up and to help them grow.

“In addition to this our Small Business Bonus Scheme currently benefits over 92,000 business properties and we would use our new responsibilities with independence to improve business support, strengthen innovation, reduce the burden of taxation and regulation, improve access to finance and provide further support for entrepreneurship.”

The figures are based on a survey of 2,458 FSB members, 243 in Scotland, between May 8 and May 20.

•Scots SMEs far more positive than UK counterparts