Scotland business

Scottish firms 'less pessimistic about prospects'

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Scottish business confidence has risen for the second consecutive quarter but remains much lower than the UK average, according to a new report.

The Federation of Small Businesses (FSB) found pessimism "subsided" north of the border in the last quarter.

However, a majority of Scottish firms still had a negative outlook about their prospects.

In contrast, confidence among UK firms slipped over the same period but remained firmly positive.

FSB said it had been two years since a majority of Scottish firms were confident business conditions were set to improve.

'Economic blues'

Its latest business sentiment survey indicated that profit margins in Scotland continue to be squeezed - with a net balance of +16% of firms in Scotland reporting that gross profits fell during the last quarter.

FSB said a key driver for the squeeze was "likely" to be the depreciation of sterling, resulting in higher prices for imported goods and services.

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The report also suggested that Scottish investment intentions were more subdued than elsewhere in the UK.

In the last quarter, a net balance of +5.7% of small businesses said they expected capital investment to rise over the next three months, compared with +13.2% in the previous quarter.

Scottish investment intentions now lag the UK as a whole by more than 12%.

FSB Scottish policy convener Andy Willox said: "A majority of Scottish businesses have been gloomy about their prospects for two years.

"While over the course of 2017 a growing share of Scottish firms have shaken off the economic blues, we can't dismiss this long-term trend."

He added: "FSB has highlighted that the cost of employment has been rising for smaller firms for some time.

"Combined with rising input costs - spiked by the fall in sterling - it is perhaps little wonder Scottish investment intentions are underwhelming."

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