Drop in Small Business Confidence

Small business confidence has fallen for a second quarter in Scotland and continues to be below the UK average, new figures show. The Federation of Small Businesses (FSB) said firms are much more cautious than earlier in the year but more companies are planning investment for the next 12 months than they were at the same point in 2013. Almost a third (32%) of firms expect their prospects to improve over the next three months while a quarter expect them to deteriorate, according to FSB research. Fewer small businesses saw a growth in revenue this quarter, although an increasing proportion of firms are reporting rising profits owing to a fall in business cost inflation. Across the UK, nearly a quarter (22%) of businesses highlighted the cost of finance as a barrier to growth, compared to 10% a year ago. Andy Willox, the FSB's head of Scottish policy, said: "Scottish small business confidence has cooled rapidly in the second half of 2014. "While more firms are producing plans to invest and reporting increased profits, our report highlights that four in 10 businesses fear subdued consumer demand could hamper their growth. "Seasonality is a factor in these results but we can't ignore that Scotland's seems to be performing poorly in comparison to many English regions. "While 2015 will undoubtedly offer many opportunities for Scottish small firms, policymakers need to focus on new ways to give more of them the best chance of success.'' The results are based on a survey of 1,771 FSB members, 174 of them in Scotland, carried out between November 3 and 14. A Scottish Government spokesman said: "Our small businesses are key drivers of sustainable economic growth. We recognise the important role they play in our communities, which is why we are doing all we can to help them by delivering the most competitive business tax environment anywhere in the UK. "Recent business survey evidence indicates that the positive momentum in the economy has continued in the second half of the year, although quarterly growth rates in the remainder of 2014 may ease back slightly to be more in line with their historical average. The global outlook is more stable than in recent years although there are headwinds from the external environment that may particularly affect Scottish exporters. "We welcome in particular the confirmation that more Scottish small business owners planning investment for 2015 than they were at the same point in 2014.''