Confidence among Scotland's small businesses falls to four year low
It is the third consecutive quarter in which optimism among small businesses north of the border has dipped
Last updated 17th Feb 2025
New figures have revealed that confidence among Scotland's small businesses has fallen to its lowest level since the height of the pandemic.
The Federation of Small Businesses has released the results of its latest Small Business Index, which show confidence fell to minus 67.2 in the fourth quarter of 2024, its lowest level since the same period in 2020, when it stood at minus 69.
Confidence among small business continues to drop
It is the third consecutive quarter in which optimism among small businesses north of the border has dipped, dropping from minus 41.2 in the third quarter last year.
The decline is believed to reflect uncertainty surrounding the wider economy and falling confidence UK-wide, with the UK SBI figure standing only slightly higher at minus 64.5 in the fourth quarter.
Andrew McRae, FSB Scotland policy chair, said: "These worrying results underline that we need urgent, concrete government action on the issues that keep small business owners awake at night.
"So many of the pressing issues come down to cost and cashflow. That is why, for example, the government's plans to tackle late payments, the scourge of many small businesses in Scotland, cannot come soon enough.
Employment Rights Bill is "a serious concern for small firms"
"It must also be acknowledged that the upcoming Employment Rights Bill is a serious concern for small firms, with nine out of 10 owners saying they are worried about its introduction.
"We are keen to gain a fuller picture of precisely what factors are shaping this gloomy outlook and this is one of the key focuses of our largest research project to date, the Big Small Business Survey.
"To that end, we would encourage as many small businesses in Scotland as possible to take part."
Six out of 10 respondents in Scotland (59%) cited the performance of the domestic economy as the biggest barrier to the growth of their own business.
Three quarters (74%) experienced rising costs in the fourth quarter, largely due to increases in utility bills, as well as labour and tax costs.
"Constant letters from suppliers raising costs"
Lauren Clark manages hospitality firm Ayrshire Food Hub. She told Northsound 1 News some of the issues she’s experiencing: “inflation, staffing as well.
“Obviously with hospitality you don’t know what staff you need, and with zero hours changing that’s going to be a big issue for us, we’ll need to move a lot of our staff from zero hours onto contracted hours.
“Suppliers costs go up around April time, and what we’re dealing with at the moment is just constant letters from suppliers raising their costs.
“That is hard because you have to balance putting your prices up but not losing your customers.”
UK Government "championing Brand Scotland"
The UK Government said it is backing British businesses through its Plan for Change, including tackling late payments and capping corporation tax at 25%.
A spokesperson added: "We're also championing Brand Scotland to promote Scottish goods and services globally through our worldwide trade and diplomatic networks.
"In Scotland, business rates are devolved but in England the UK Government has delivered lower rates for leisure, hospitality and retail businesses.
"We will be publishing our plan to help small businesses start up and grow later this year."
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