SME confidence varies across UK

Friday 11 September 2015

New findings from the Federation of Small Businesses (FSB) have revealed that small to medium-sized enterprises (SMEs) in Scotland are slightly less optimistic about their prospects over the next 12 months than those located in other parts of the UK.

Despite this, the majority of Scottish SMEs are still planning to expand and take on more staff in the next year, reflecting the overall high levels of confidence in the UK economy reported by entrepreneurs.

The quarterly Voice of Small Business Index survey revealed that a net +6.2 per cent of SMEs have experienced increased revenue over the past three months. While this figure is lower than the +17 per cent that was reported for the same period last year, it is likely that this is due to the economic recovery beginning to stabilise.

While fewer businesses will be able to report headline-grabbing growth figures, overall prosperity is more likely to be widespread, accounting for more modest and consistent increases in the coming quarters.

However, a net +18 per cent expect their situation to improve over the coming year, which is similar to the figures for recent quarters. The figure was lower for SMEs in Scotland, coming in at +6.1 per cent.

Regarding the somewhat weaker position of Scottish SMEs, the FSB’s Scottish policy convenor Andy Willox told the BBC: "With revenues and profits taking a hit, it's little wonder that confidence has dropped.

"Even in these choppy waters, though, it's good to see small businesses continuing to do their bit by creating new jobs and investing for the long term. And the improving credit market will make it easier to turn firms' plans into reality.

"We need to make sure that the small businesses on whom resilient local economies are founded get paid for the work they do, get a fair deal from regulators, and can easily hire the right staff with the right skills."

Overall, 180 of the respondents to the Voice of Small Business Index survey were from Scotland, as part of the 1,570 participants from across the UK.

A total of 36 per cent of those surveyed said that they were unable to afford the cost of loans. This suggests that measures to encourage banks to lend to smaller businesses are starting to take effect, as the number who felt credit was unaffordable reached its highest levels of more than 60 per cent in 2012 and 2013, while the impact of the recession was still being felt.

Credit availability has also increased, with less than half (48 per cent) of firms saying that it is hard to find. Again, this is significantly better than the situation in 2013, where the figure reached 70 per cent.

Overall, it seems likely that the economic recovery is going to continue extending its benefits to SMEs throughout the UK, although it is inevitable that the gains will not be distributed completely equally. There is plenty to be confident about, which should offer reassurance to all those looking to expand during the coming months.

By Victoria McDonnell

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