Business optimism in Scotland is at the lowest ebb ever recorded, the FSB has said.
The UK index, which measures business owners’ views on whether trading conditions will improve or deteriorate, fell to -9.9 points from -1.7 points the previous quarter. This means confidence among UK small firms has fallen to its lowest point since 2011.
The equivalent Scottish figure crashed to -32.6 points from -13.2 points earlier in the year – the lowest since Scottish figures were first collected.
The FSB released the figures ahead of the Scottish Government’s Budget tomorrow and urged Derek Mackay to shape his budget in a way that would give small operators a much needed lift.
Andrew McRae, the Scotland policy chair for the Federation of Small Businesses (FSB) , said: “These gloomy figures show that the uncertainty and confusion associated with Brexit is having a huge impact on business optimism.
“It looks likely that confidence will only return when there’s a clear path beyond the March 29 deadline that safeguards smaller businesses’ interests.
“While Scottish business confidence has long tracked below the UK average, this new low suggests firms north of the border are particularly distressed about the current state of affairs.”
A previous low of -28.9 points was recorded in Scotland in the last quarter of 2016. The second-lowest UK SBI (-2.9 points) reading since 2011 was also recorded in the wake of the EU referendum.
Across the UK, more than two-thirds (67%) of small firms do not expect to increase capital investment in the coming quarter while one in seven (15%) are planning to actively decrease investment.
With EU net migration at a six-year low, the number of UK small business owners citing lack of access to appropriate skills as a barrier to growth is also on the rise, with a third (36%) of firms highlighting this as an issue.
However FSB data shows that half of UK small firms still aspire to grow their businesses over the next 12 months, a figure largely unchanged from this time last year.
Mr McRae added: “Tumbling investment intentions should worry decision-makers as should skills shortages.
“In our discussions with ministers we’ve stressed the importance of rates reforms, underlined the need for skills development and urged the Scottish Government to prepare its agencies and business community for post-Brexit trading conditions.
“We’d urge Derek Mackay to gear his Budget toward giving smaller operators a much needed lift.”