Scotland’s small businesses ended a tough 2019 with confidence and profits falling, new figures from the Federation of Small Businesses (FSB) reveal.
In the final quarter of 2019, FSB’s Scottish Small Business Index (SBI) fell by 13.7 points to stand at -27.2. The fall was mirrored across the UK, where small business confidence fell 13.5 points to -21.6.
At the same time, a net balance of 12.9% of small businesses in Scotland reported falling profits. This is down on the 12.1% negative balance seen in Q2, when the question was last asked.
These figures reflect last week’s official GDP data, which show the UK economy flat-lined in the final quarter of 2019.
FSB’s Scotland Policy Chair, Andrew McRae, said:
“When you look at the turbulent political landscape and the uncertainty about the post-transition trading environment, it’s no wonder confidence has taken a hit.
“We’re not back down at the record lows we saw earlier in 2019, but we’re seeing rising spare capacity and depressed hiring intentions, so we need to act.
“All eyes will now be on next month’s UK Budget to see what the new Chancellor delivers for small firms. Action on the debilitating impact of late payments would be a great place for him to start. We also need early reassurance that employers will see a practical post-EU immigration system that works for businesses of all sizes.
“At Holyrood, where we have recently seen common sense on business rates prevail, the Scottish Government now needs to focus on moves to rejuvenate our towns and high streets, get more empty units back into use and support the growth potential of our migrant entrepreneurs.”
Despite this fall in confidence from the previous quarter, year-on-year the Scottish confidence index has climbed by 5.5 points.
The report also reveals that small businesses were unable to maintain employment growth in Q4, with 4% more laying staff off than taking them on. This is a negative swing of 9.2 percentage points compared to Q3. Looking ahead, a net balance of just 0.8% of Scottish small businesses plan to get hiring in the next 12 months.
The share of small businesses in Scotland operating below capacity has also risen for the second consecutive quarter. In Q4, the proportion of Scottish small businesses operating below capacity was 58.1%, an increase of 4.8 percentage points compared to the previous quarter. Only 11.3% of small businesses were operating above capacity over the same period.
ENDS
Notes to Editors
- FSB surveyed 1,029 small businesses for the Q4 2019 Small Business Index between 26 November and 9 December 2019, including 125 from Scotland. The SBI – a weighted index measuring confidence in future business performance - is conducted by independent research company Verve.
- For a copy of the Scottish or UK small business confidence index, email Laura or Colin. Infographics are also available.
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