Scotland business

Small businesses in Scotland 'much more cautious'

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Small business confidence has fallen for a second consecutive quarter in Scotland and continues to lag behind the UK average, according to a survey.

The Federation of Small Businesses (FSB) found firms were much more cautious than earlier in the year.

However, more companies said they were planning to invest over the next 12 months than was the case a year ago.

Almost a third expected their prospects to improve over the next three months, while 25% expected them to worsen.

Fewer small businesses saw a growth in revenue in the latest quarter, although an increasing proportion of firms reported rising profits owing to a fall in business cost inflation.

Across the UK, nearly a quarter (22%) of businesses highlighted the cost of finance as a barrier to growth, compared with 10% a year ago.

Confidence 'cooled'

Andy Willox, the FSB's head of Scottish policy, said: "Scottish small business confidence has cooled rapidly in the second half of 2014.

"While more firms are producing plans to invest and reporting increased profits, our report highlights that four in 10 businesses fear subdued consumer demand could hamper their growth.

"Seasonality is a factor in these results but we can't ignore that Scotland's seems to be performing poorly in comparison to many English regions.

"While 2015 will undoubtedly offer many opportunities for Scottish small firms, policymakers need to focus on new ways to give more of them the best chance of success."

A Scottish government spokesman said: "Our small businesses are key drivers of sustainable economic growth.

"We recognise the important role they play in our communities, which is why we are doing all we can to help them by delivering the most competitive business tax environment anywhere in the UK.

"Recent business survey evidence indicates that the positive momentum in the economy has continued in the second half of the year, although quarterly growth rates in the remainder of 2014 may ease back slightly to be more in line with their historical average."

He added: "We welcome, in particular, the confirmation that more Scottish small business owners are planning investment for 2015 than they were at the same point in 2014."

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