The most recent bi-annual Business in Britain Report, published by the Bank of Scotland (BoS), shows that Scottish business confidence has dropped to the lowest it has been since 2016. Scotland is now ranked amongst the lowest in the UK in terms of business confidence.
This report is comprised of opinion taken from 1,500 UK firms and weighs up the percentage of firms positive in outlook against the negative. According to the report, Scottish business confidence has dropped two points since July 2017 and is now at (17%).
Scotland ranks second to last; the lowest level of confidence is in Yorkshire and the Humber with (15%). Meanwhile, business confidence is highest in the North East (38%) followed by the North West (31%) and the West Midlands (28%).
Scotland’s capital spending balance is also trailing behind the rest of the UK, which is below the national average, and has remained at (2%). In contrast, Scottish firms are anticipating stronger total exports and have remained positive at (17%). The net balance of those looking to grow investment has remained stable at (2%).
BoS has cited that economic uncertainty was the single greatest risk to Scottish businesses, with (27%) concerned, up from (22%) six months ago. The proportion of Scottish firms confident about business prospects in the Brexit talks fell to (38%) from (49%), while those who lacked confidence in this regard rose 10 points to (35%).
Jane Clark-Hutchison, BoS regional director said: “It’s disappointing to see Scottish businesses towards the bottom of the confidence index but perhaps not unsurprising given the backdrop of economic uncertainty.”
The Federation of Small Business (FSB) recently reported a similar downward trend in Scotland’s business confidence. Their survey found that lower profitability, fluctuations in oil prices, the depreciation in the pound raising input prices and a decline in real incomes for consumers are factors in contributing to this confidence slump.
According to the FSB, the state of the domestic economy is the most commonly cited barrier to growth. However, FSB predict that easing inflation in 2018 will help consumers’ budgets and strengthen domestic demand, while the low pound is expected to benefit exporters.
Andy Willox, FSB Scottish Policy Convenor said: “Though business confidence has dropped across the board, these figures show a long-term optimism gap between a typical firm in Scotland and their counterparts elsewhere in the UK. If Scotland is to confound predictions of sluggish economic growth for the foreseeable future, then closing this gap should be a top priority.”