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Business confidence drops to all-time low as Brexit concerns mount

The figures were published ahead of the Scottish Government’s draft budget on Wednesday.

The figures recorded indicate that Brexit has led to a decrease in business confidence (Jane Barlow/PA)
The figures recorded indicate that Brexit has led to a decrease in business confidence (Jane Barlow/PA)

Business optimism in Scotland has hit an all-time low, according to new figures.

A report published by the Federation of Small Businesses (FSB) indicated that confidence had dropped across the UK, with uncertainty around Brexit cited as a key concern.

The FSB surveyed 1,064 small businesses – of which 206 were based in Scotland – between November 19 and December 3.

The UK index, which measures business owners’ views on whether trading conditions will improve or deteriorate, fell to -9.9 points, down from -1.7 points in the previous quarter.

The equivalent Scottish figure crashed to -32.6 points, down from -13.2 points earlier in the year – the lowest since Scottish figures were collected.

We’d urge Derek Mackay to gear his budget toward giving smaller operators a much-needed lift Andrew McRae, FSB Scotland policy chair

The figures were published ahead of a vote on Theresa May’s Brexit deal in the House of Commons on Tuesday and the publication of the Scottish Government’s draft Budget on Wednesday.

Andrew McRae, FSB Scotland policy chair, said: “These gloomy figures show that the uncertainty and confusion associated with Brexit is having a huge impact on business optimism.

“It looks likely that confidence will only return when there’s a clear path beyond the March 29 deadline that safeguards smaller businesses’ interests.

“While Scottish business confidence has long tracked below the UK average, this new low suggests firms north of the border are particularly distressed about the current state of affairs.”

More than a third of firms surveyed (36%) also indicated a lack of access to appropriately-skilled workers from the EU was also a barrier to growth, with migration at a six-year low.

The FSB last month wrote to the Scottish Government outlining its proposals to boost the economy.

Mr McRae said: “This week, the Finance Secretary must do what he can to shore up optimism.

“In our discussions with ministers, we’ve stressed the importance of rates reforms, underlined the need for skills development and urged the Scottish Government to do what it can to prepare its agencies and business community for post-Brexit trading conditions.

“We’d urge Derek Mackay to gear his budget toward giving smaller operators a much-needed lift.”

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The Scottish Government’s draft budget will be published on Wednesday (John Linton/PA)

A Scottish Government spokesman said: “As the FSB makes clear, Brexit continues to be the Scottish economy’s biggest risk, including the negative impact it threatens to have on our jobs market.

“The only deal that delivers for Scotland is to remain in the single market and customs union, which is eight times larger than the UK market alone.

“Responsibility for migration should be devolved so we can tailor policy to Scotland’s needs.

“We are doing all we can to support the Scottish economy, including maintaining a competitive non-domestic rates regime for businesses.

“We provide the most competitive rates relief package anywhere in the UK, worth an estimated £732 million in 2018-19, including the small business bonus scheme, which alone lifts 100,000 properties out of rates altogether and our current transitional rates relief scheme, which is expected to save businesses over £15 million this year.”

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