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Business confidence falls into negative territory

Published 01/06/2016

A drop in Scottish business confidence follows a prolonged downturn in the oil and gas market
A drop in Scottish business confidence follows a prolonged downturn in the oil and gas market

Scottish businesses have reported a "troubling" dip in confidence in their prospects for the coming year.

Business confidence in Scotland is among the lowest in the UK and has dropped into negative territory for the first time in 12 months, according to the latest ICAEW/Grant Thornton UK Business Confidence Monitor.

A confidence score of minus seven was recorded for the second quarter of 2016, down on the positive 10.4 rating for the previous quarter.

Kevin Engel, Grant Thornton UK's managing partner in Scotland, said: "It's troubling to see such a dip in confidence levels, but also understandable, given the level of political and economic uncertainty facing the nation.

"Our findings follow a prolonged downturn in Aberdeen's oil and gas market, which has far-reaching consequences throughout the wider Scottish economy.

"The positive news is that the energy sector looks to be slowly turning the corner with potential recovery in sight.

"In the meantime, what is urgently needed is collaborative action from politicians and business leaders to tackle other serious issues, including halting the decline in exports and creating world-class physical and digital infrastructure."

Andrew Hewett, ICAEW Scotland president, said: "After seeing confidence stabilise last quarter, it is disappointing to see it return to negative levels this time around.

"There are, however, many factors that may have led to this - from the ongoing impact of the problems within the oil and gas sector, to the uncertainty that is often seen around an election.

"With the recent Holyrood elections and the upcoming EU referendum dominating the headlines, both may easily have contributed to the result.

"Add to this the fact that the UK as a whole has seen a decline in confidence in the financial sector, which of course is a major employer in many Scottish cities, and it's easy to understand the pragmatism among those surveyed."

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