Confidence among small businesses in Scotland has taken another turn for the worse as the cost of doing business crisis hits them like a “force 10 gale”, a new survey said.
Meanwhile, the report from the Federation of Small Businesses (FSB) found that one in six small businesses in Scotland still fear they may be forced to shrink, sell or shut down over the next 12 months for the second quarter running.
The small business group’s Quarter 3 Small Business Index (SBI) reveals confidence has worsened since the second quarter of this year, and is “significantly lower” than in the same period last year.
Furthermore, Scotland’s businesses are even gloomier than their counterparts in England.
FSB Scotland policy chair Andrew McRae said it was “vital” the UK Government focuses on “stability”.
This includes delivering on promises to help small firms with energy bills and reverse the hike in National Insurance.
The UK’s new Chancellor Jeremy Hunt recently cancelled a number of tax cuts implemented by his predecessor this week in an attempt to stem market chaos. He will further flesh out how to balance the UK’s books on 31 October.
Mr McRae said the new chancellor had to support small businesses: “Scotland’s small business community has endured two and a half very difficult years and is now battling against the added threats of rising inflation, increasing energy prices and staff shortages, to name a few.
“Never underestimate the tenacity and determination of small business owners to triumph against the odds. But these aren’t so much economic headwinds, as a force 10 gale.
“And, again, we see that at least one in six business owners are thinking of shrinking, selling or shutting their operations – a figure unchanged from last quarter.
“The recent political and economic turmoil is clearly having a real-world impact.
“That’s why it’s vital the UK Government focuses on stability, including delivering on its promises to help with energy bills for small firms and reverse the hike in National Insurance.
“Those saving must be in the pockets of small firms by next month, followed by clarity on what will happen to energy deals after the initial six-month period.
“At the same time, there will be opportunities in the Scottish Government’s budget, due by the end of the year, to protect small firms and free them up to drive growth, which we’ll be exploring in the days and weeks ahead.”
The FSB its measure of confidence now sits at -45.7% for Scotland, down on the -31.8% reported the previous quarter and lower than the same quarter in 2021 (+1.2%) and 2020 (-26.3%).
The equivalent UK-wide confidence figure is -35.9%, which is also down on the previous quarter (-24.7%), but 9.8 points ahead of Scotland.
The SBI also shows that nine out of every ten businesses (90.7%) have seen costs increase over the last 12 months, with increases in fuel and utilities the most common drivers.
As wider inflationary pressures bite, almost half of those surveyed in Scotland (46.9%) expect to have a decrease in revenue over the next 12 months.
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