SCOTTISH small business confidence has plummeted following the Brexit vote to its lowest since 2011, with firms overall signalling a likelihood of job cuts in the coming three months, a key survey has revealed.

And 63 per cent of small businesses in Scotland now view the performance of the UK economy as a barrier to growth, up from 46 per cent three months ago.

The latest quarterly survey from the Federation of Small Businesses (FSB) shows a plunge in the Scottish small business index, which measures confidence, to -18.8. This signals a significant majority of firms believe the trading environment will deteriorate. The index was down from -5.5 in the preceding three months, and from +1.7 in the third quarter of last year.

The UK small business index fell to -2.9 in the latest quarter, from +4.3 in the preceding three months.

Asked if he was surprised or disappointed by the Scottish survey results, FSB senior public affairs advisor Stuart Mackinnon said: “I think, given the political and economic instability of the last two months, I would have been surprised if confidence had increased but, given the summer we have had, it is perhaps to be expected you would see fewer small businesses confident about the future.”

He added: “There are still some bright spots – the job of policy-makers is to persuade businesses they have a strong plan for the future of the country.”

Mr Mackinnon highlighted a pressing need for the UK Government to address major uncertainties facing small businesses following the UK electorate’s June 23 vote to leave the European Union.

He said: “There is still a lot of work to be done, especially if you run a business that has particularly strong links with the Continent or if you employ non-UK EU nationals, and many of our members are still not clear about the implications for them or their business.

“There is certainly work to be done to reassure the smaller business community that all the details they care about have been taken care of.”

Mr Mackinnon said all business sectors had experienced a fall in confidence in the latest quarter, following the Brexit vote.

He noted a particularly sharp drop in confidence among small businesses in the retail sector in the UK as a whole, believing this might also be related to the introduction of the National Living Wage.

Subtracting the proportion expecting to raise headcount from that forecasting a fall, a net three per cent of Scottish small businesses anticipate cutting back on staff numbers in the coming three months.

The FSB warned: “If this trend was replicated across the small business community as a whole, it would place renewed pressure on the labour market.”

In spite of the plunge in confidence, a net 24 per cent of Scottish small businesses plan to increase investment over the coming three months, with firms noting improved affordability of credit.

Andy Willox, the FSB’s Scottish policy convenor, noted confidence among small firms north of the Border had been weak even ahead of the Brexit vote partly because of the oil and gas industry’s woes and pressure on the services sector.

A Bank of England agents’ survey yesterday showed, among UK companies of all sizes, investment and employment intentions had fallen, and were now consistent with broadly flat levels of capital spending and employment over the coming six to 12 months.

A survey by insurer Zurich this week concluded small and medium-sized businesses in the UK had faced a “tumultuous” time since the Brexit vote.

The survey highlighted particular fears among small and medium-sized enterprises about risks to international trade, and the plunge in the pound arising from the Brexit vote. Of Scottish businesses surveyed by Zurich, 53 per cent cited risks to international trade as a key concern.