SCOTTISH businesses are, overall, significantly less confident about the economic prospects facing them than their peers elsewhere in the UK, and have recorded slower growth in sales volumes and profits, a survey has found.

The latest quarterly survey by the Institute of Chartered Accountants in England and Wales and Grant Thornton shows Scottish businesses recorded a confidence score of +7.5 for the current quarter. While in positive territory, this was down from +12.9 in the third quarter and well adrift of an average of +15.6 for the UK.

Andrew Hewett, president of ICAEW in Scotland, said: “Whether this is the usual caution we would expect to see in the run up to the Holyrood election, a reflection of the uncertainty caused by cuts in the oil and gas sector, or something more remains to be seen, as does its impact in terms of future growth.”

The confidence score is derived by asking businesses about their confidence in the economic prospects facing them over the coming year, compared with the previous 12 months.

A score of +100 would indicate all respondents were much more confident. A reading of -100 would signal all respondents were much less optimistic.

The ICAEW and Grant Thornton survey shows Scottish businesses’ sales volumes growing by 3.6 per cent year-on-year overall in the latest quarter. The survey for the fourth quarter of 2014 showed year-on-year growth in sales volumes of 4.9 per cent. Slower sales growth has been experienced in both domestic and international markets, the survey found.

Over the same timeframe, year-on-year growth in profits has slowed from 4.9 per cent to 2.8 per cent.

And Scottish businesses expect year-on-year growth in sales and profits to slow further, to three per cent and 2.5 per cent respectively over the next 12 months.

ICAEW and Grant Thornton noted that Scottish businesses were projecting a rise of only one per cent in their research budgets over the next year, less than half of the pace of increase over the last 12 months. They warned that this could pose a challenge for future economic growth.

Kevin Engel, managing director of Grant Thornton in Scotland, said: “A decline in sales and profit growth, which in turn has had an impact on research and development investment, is a knock-on effect of growing uncertainty in the Scottish economy.”

He cited the global and domestic oil and gas downturn and next year’s Scottish Parliament elections as contributors to uncertainty. He also underlined uncertainty for businesses in the run-up to Chancellor George Osborne’s Autumn Statement and Spending Review last week.