Brexit blamed as business confidence ‘evaporates’ among small firms

Scottish small business confidence has evaporated, an industry representative warned as research recorded a double figure drop.

A survey for the Federation of Small Businesses (FSB) found confidence among small firms in Scotland has slid in the third quarter of 2019, reversing the resurgence seen earlier in the year.

The FSB’s small business index for Scotland, which measures enterprise optimism, dropped from +3.3 points in the second quarter to -13.5 points in the third.

In the same period, the UK figure gained marginally from -8.8 points to -8.1 points.

However, for the first time since the index began in 2010, the overall UK figure has been in negative territory for five successive quarters.

Andrew McRae, FSB Scotland policy chairman, said: “Scottish business confidence has evaporated over the last quarter.

“And for more than a year now, UK business optimism has been outweighed by fear and doubt about the direction of the economy.

“This trend will only end when policymakers pull themselves together and set out a clear plan for our futures.

“We must see progress on avoiding a no-deal, no-transition Brexit.

“While firms must do what they can to prepare for this outcome, it would be unforgivable if good Scottish businesses go to the wall because of political games.”

The research, conducted by independent firm Verve, surveyed 1,245 small businesses including 173 from Scotland.

About three-quarters (76%) of respondents in Scotland said their costs have increased compared to the same point last year.

UK-wide, about two-thirds (67%) of businesses reported increased overheads.

The FSB is calling for an emergency UK Budget to restore confidence, including measures such as an expansion of the employment allowance.

It also wants Scottish Finance Secretary Derek Mackay to ensure business concerns are at the top of the agenda for the Cabinet in Edinburgh.