Scotland’s small business confidence fell again in the final quarter of 2022, according to the latest figures from the Federation of Small Businesses (FSB).
Its Small Business Index now sits at -50 points for Scotland, down on the -45 reported the previous quarter. It is also significantly lower than the same quarter in 2021 (-22).
The equivalent UK-wide confidence figure is -45.8, which is also down on the previous quarter (-35.9), but 4.1 points ahead of Scotland.
FSB’s Scotland policy chair Andrew McRae said: “Scotland’s small business community has endured an unprecedented sequence of challenges over the last two and a half years: rising inflation, increasing energy prices, and staff shortages to name a few.
“The constant battle to just survive during this cost of doing business crisis means it is no surprise that confidence levels are now at their lowest on record, outside of Covid lockdowns.”
He argued that it is therefore vital that governments in Holyrood and Westminster focus on support and stability by pausing the introduction of new regulations, supporting sectors most in need and reconsidering the energy cost support on offer after March.
“This refocussing would help develop an operating environment with, if not certainty, then at least less turmoil; and an environment where small businesses can survive, and even thrive, and drive the economic growth needed to get the economy back on its feet.”
The index also showed that 86.2% of businesses have seen a sizeable change in their business costs over the last 12 months, with increases in fuel and utilities the most common drivers.
Almost half (42%) expect to run below capacity over the next three months and only a third (32.7%) are expecting to grow in the next 12 months.
The FSB surveyed 1,072 small business owners between 8 and 23 December - 85 of whom were based in Scotland - with the organisation pointing out that this was before the announcement by UK Government that business support for energy costs would be cut significantly from April.
Separately, sentiment tracked by ICAEW’s Business Confidence Monitor for Scotland put confidence at -27.8 on the index, the lowest score since 2009, and second weakest in the UK behind Yorkshire and the Humber.
Domestic sales were strong, despite the sharp decline in confidence, but businesses continued to struggle with high inflation, risings costs and financial challenges, the survey found.
David Bond, ICAEW director for Scotland, said: “These are sobering findings for Scottish businesses, with confidence crashing to levels not seen for 14 years.
“As our companies grapple with tough economic conditions and political turbulence, they must still contend with financial and labour market challenges, which the index indicates are weighing heavily on business sentiment.
“With confidence at a decade low, it’s time for the Chancellor to outline his long-term vision for growth for the UK, injecting resilience into the economy and bringing in a period of renewal for the future.”
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