World Economy

Scottish Business Confidence Declining

Scottish Business Confidence DecliningScottish Business Confidence Declining

There is a call for ‘resilience’, as Scotland becomes the only part of the UK to report a negative business confidence score for the latest quarter of 2015.

Scottish businesses recorded a confidence score of -7.4 (down from +3.6 for Q1) placing the Scottish score well below the UK average of +16.6 for Q2, Scotland’s BQlive reported.

There has been a sustained slowdown across a range of key financial performance indicators. Year-on-year profit growth has fallen from 6% in Q2 2014 to 3.3% in the latest quarter and similar decelerations have been experienced in sales volumes and turnover.

Export growth has seen a notable decline in recent quarters as overseas sales increased by just 0.6% over the last 12 months, compared with a 3.1% increase in the year to Q2 2014.

The report suggests that Scottish firms do not anticipate things to improve in the immediate future, with respondents forecasting a further decline in the growth of key indicators over the next 12 months.

Turnover growth is expected to drop from the 3.4% recorded over the past year to just 1% over the next 12 months.

Scotland President of the Institute of Chartered Accountants in England and Wales, Andrew Hewett, said: “This is part of an ongoing decline in confidence in Scotland, which can perhaps be attributed to ongoing uncertainty. The aftermath of the referendum, the run up to the general election, the forthcoming Holyrood (parliamentary) elections and the possibility of an EU referendum combine to mean that there is, potentially, an even deeper degree of uncertainty in Scotland than there is elsewhere in the UK, a feeling which is reflected in Scottish confidence levels. ”

Grant Thornton UK’s Managing Partner in Scotland, Kevin Engel, added:  “This significant drop in confidence north of the border is naturally concerning, particularly given Scotland is the only part of the UK showing such a marked negative trend. The quarter examined covers the pre-election period, which could go some way to explain the downward shift in confidence.

“However the Scottish business community is historically resilient. Now is the time for that tenacity in the face of challenging conditions to come to the fore to resist the potential dip in economic performance that may follow.”