SMALL and medium-sized businesses in Scotland are more worried about the UK economic outlook than those in any other part of Great Britain, a survey has revealed, with the Brexit vote cited as one “very plausible” explanation.
Small and medium-sized enterprises (SMEs) north of the Border also have the most negative view of likely business conditions for their company over the next 12 months, according to the survey conducted by Capital Economics in association with Enterprise Nation and Amazon UK.
Scottish businesses expect a significant deterioration in the UK economy over the next 12 months, with a confidence score of -26. This is much worse than an average of -13 for Great Britain as a whole. The survey did not cover SMEs in Northern Ireland.
SMEs in every part of Great Britain forecast a deterioration in the UK economy in the coming 12 months. Small and medium-sized businesses in the south-east of England were the least pessimistic, with a confidence score of -3.
In terms of business conditions for their company over the next 12 months, the confidence score of -3 from the 106 SMEs surveyed in Scotland, as well as being worse than that for any English region or Wales, was way adrift of the overall average of +5 for Great Britain.
Surveys in the run-up to the UK electorate’s June 23 vote to leave the European Union showed Scottish firms were significantly more keen to remain in the EU than their counterparts elsewhere, even though there was generally majority support for Remain among businesses in the UK as a whole.
Asked if Scottish firms’ pessimistic view of the UK economic outlook might reflect a greater degree of disappointment about the referendum result, Capital Economics chief project economist Mark Pragnell replied: “Certainly, that is one very plausible explanation – the reason why Scotland has seen a dent in confidence above that seen elsewhere in the country is something that reflects [the] Brexit vote.”
He noted the survey was quantitative, rather than asking SMEs why they were optimistic or pessimistic, but observed that parts of Great Britain in which there had been greater support for staying in the EU had lower confidence readings and vice-versa.
Mr Pragnell emphasised that, although Scottish SMEs were gloomy about the outlook for business conditions and the UK economy over the next 12 months, they were relatively upbeat about the prospects for their revenues over the coming year.
Scottish SMEs projected an average 1.2 per cent rise in revenues over the next 12 months, a greater increase than the 0.6 per cent recorded over the past year. He noted this projected increase was not far adrift of the 1.5 per cent average rise in revenues projected by SMEs across Great Britain.
Scotland has the biggest share of SMEs using e-commerce, at 55 per cent, according to the survey. Only one-third of SMEs in north-west England use e-commerce.
A separate report commissioned by international money transfer firm World First, conducted by the Centre for Economics and Business Research, shows 52 per cent of Scottish SMEs expect Brexit to hinder their trading ambitions, greater than a UK average of 42 per cent.
Only 15 per cent of Scottish SMEs think the UK electorate’s vote to leave the EU could help in the future. This is four percentage points lower than the UK average.
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