By Ian McConnell

SCOTTISH small business confidence has plummeted, and nearly one-quarter of firms believe conditions will get much worse, a survey has revealed.

The Federation of Small Businesses said confidence “likely fell in the autumn as the prospect of new coronavirus-related restrictions rose”.

The FSB’s Scottish small business confidence index fell to -26.3 points in the third quarter, from -10.5 in the preceding three months. Confidence in the second quarter had been less negative than in the opening three months of this year.

Around 24 per cent of Scottish small business owners believe conditions will get much worse over the fourth quarter. And 19% believe conditions for their business will get slightly worse. Only 11% think conditions will get a lot better.

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Meanwhile, 53% of Scottish small businesses reported a drop in revenues in the third-quarter survey. And 49% expect revenues to fall this quarter.

The Scottish confidence index was not as bad as that for the UK, which was -32.6. This is the first time since spring 2019 that the Scottish reading has been better than the UK index.

Andrew McRae, FSB Scotland’s policy chair, said: “These figures show, as businesses’ income has collapsed, many business leaders have been forced to make very difficult choices. If government doesn’t want to see a glut of job losses, then policymakers will need to either provide sufficient support for firms or reduce restrictions on the economy.

“We’ve expressed hope that the Scottish Government’s new strategy could be a blueprint for reopening the economy, rather than shutting it down. But our members are telling us that they’ve little faith that things are going to get better anytime soon. Ministers in Edinburgh have their work cut out to persuade those in business that trading conditions are going to improve.”

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The FSB flagged pressures on small businesses from continued Brexit uncertainty, noting the cost of preparing and a lack of cash.

Mike Cherry, the FSB’s national chair, said: “More than four years on from the EU referendum, Scottish small firms need clarity around what the end of the transition period will mean now more than ever. Negotiators on both sides must pull out all the stops to secure a deal, one that includes a substantial small business chapter outlining how the new agreement will help the firms that make-up 99% of the UK business community.”

He added: “As things stand, small firms are being told to shell out for both safety measures and preparations for our new relationship with the EU. Many would like to do more but have run out of cash after a torrid six months. If the Government wants small business owners to step-up preparations, it needs to make doing so financially viable. The introduction of transition vouchers – grants worth up to £3,000 for small firms that trade internationally to spend on preparations for 1 January – would go a long way to aiding efforts.”