Scottish firms regain confidence but “tale of two economies” revealed in new FSB research

Andrew McRae, FSB Scotland's policy chair

CONFIDENCE in the Scottish small business community is coming back after a collapse in optimism recorded earlier this year, according to new research from the Federation of Small Businesses (FSB).

FSB’s Scottish small business confidence index jumped from -154.8 points in Q1, the lowest ever figure recorded, to -10.1 points in Q2. Over the same period, the UK-wide index increased by 138.4 points to -5.0 points.

However, expectations of future performance are increasingly polarised, with a quarter (25%) of the 195 Scottish business owners surveyed in June for the study expecting their performance to be “much worse” over the coming quarter, whereas one in ten (11%) expect the opposite.

Andrew McRAE, FSB’s Scotland Policy Chair, said: “After a complete collapse in business confidence in the previous quarter, the fact that confidence is coming back is most welcome.

“But let’s be clear – small businesses are by no means out of the woods. These figures tell a tale of two economies – the one that is getting back to business and the one with a much tougher journey back. 

“A division has opened up between those that have been able to access support or diversify their operations and those that have gone four months unable to trade or tap into help.”

According to the research, the share of small firms in Scotland that have reduced headcounts over the last three months is at an all-time high (23%), while the proportion of businesses creating jobs is at an all-time low (1.5%).

Mr McRae added: “It’s great to see signs of recovery – but we can’t be complacent. While government figures don’t yet show a significant surge in unemployment, our statistics suggest that many firms are already making very difficult decisions.”

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