www.fsb.org.uk/scotland
SCOTLAND Q1 2019 SMALL BUSINESS INDEX Scottish small business confidence remains depressed as the Small Business Confidence UK index recovers limited ground. In the first quarter of 2019, the 50 FSB Scottish Small Business Index (SBI) fell 1.8 points to -34.5. This is the third consecutive quarterly fall in the confidence barometer and 40 brings Scottish sentiment to another new record low.
-10 -20 -30
Scotland SBI
UK SBI
Q4 2018
Q3 2018
Q1 2018
Q3 2017
Q1 2017
Q3 2016
Q1 2016
Q3 2015
Q1 2015
Q3 2014
Q1 2014
Q3 2013
Q1 2013
-40
Source: FSB Small Business Index.
Net balance of small firms in Scotland reporting revenue/profit growth 30% 20% 10% 0% -10%
Revenue
Profit
Q2 2019
Q4 2018
Q2 2018
Q4 2017
Q2 2017
Q4 2016
Q2 2016
Q4 2015
Q2 2015
Q4 2014
-30%
Q2 2014
-20%
Q4 2013
This latest fall in the revenue net balance means more Scottish small businesses have reported revenues falling than rising in every quarter the question has been asked since Q3 2016. The Scottish economy had more or less flat-lined in 2016 and until the middle of last year had been performing worse than the UK average since 2014. It should therefore not perhaps come as a major surprise that this has fed through into weaker revenue growth for small businesses.
0
Q2 2013
Small businesses in Scotland report weaker revenues over the past three months. A negative net balance of -20.2% of small businesses in Scotland reported that their revenues had risen over the last three months. This is a dramatic decline of 12.5 percentage points on the -7.7% balance from Q3 2018. Expectations for the coming three months show that Scottish small businesses hold a less gloomy view of Q2 2019, with the net balance of firms expecting revenues to increase moving back towards balance at -10.0%.
10
Q4 2012
UK small business confidence rose in Q1 despite regional divergences. The SBI for the UK as a whole rose from -9.9 in Q4 2018, to -5.0 in Q1 2019. Although the overall index rose over the latest quarter, confidence has moved in opposite directions in different nations and regions of the UK, increasing the gap between the most (Yorkshire and the North East, +18.9) and least confident (Scotland, -34.5) areas to 53.4 points. Year-on-year, the UK-wide index fell by 11.0 points, and (excluding Q4 2018) remains lower than every other quarter since Q4 2012. Perhaps paradoxically, the quarterly uptick in confidence coincided with disappointing economic growth of 0.2% in the three months to January 2019. The first quarter of 2019 had been expected to mark the end of two and a half years of uncertainty over the way the UK will leave the EU. With so little progress made in the UK Parliament (certainly when the field work was carried out), almost all outcomes remained plausible, allowing businesses from different regions of the UK to form markedly different expectations of the most likely scenario and its consequences.
20
Q3 2012
Business costs also rose for the majority of Scottish small businesses in the 12 months to Q1 2019. Higher input costs were the most significant driver of cost increases during the quarter.
30
Q2 2012
Across the UK as a whole, the small business confidence index rose by 4.9 points in Q1 to -5.0. Alongside the decline in confidence, a larger proportion of Scottish small businesses saw revenues fall rather than rise in the latest quarter. This measure last showed a positive reading in Q3 2016 when a net balance of 3.4% of businesses recorded higher revenues.
Source: FSB Small Business Index