www.fsb.org.uk/scotland
SCOTLAND Q2 2019 SMALL BUSINESS INDEX Scottish small business confidence has risen sharply, in contrast Small Business Confidence to elsewhere in the UK. In the second quarter of 2019, the FSB 50 Scottish Small Business Index (SBI) jumped from -34.5 points to +3.0 points. This is the highest reading since Q2 2018 and marks just the 40 second positive reading of the index since the end of 2015.
0 -10 -20 -30
Across the UK, small business confidence fell over the last three months. The UK-wide SBI index fell 3.8 points quarter-on-quarter, down from -5.0 in Q1 2019, to -8.8 in Q2 2019. The Scottish SBI, on the other hand, was up an impressive 37.5 points to +3.0 in Q2 2019. Northern Ireland declined almost 61 points to -35.7 in Q2, the biggest move in any direction across the UK. London was the most pessimistic region in England, at -30.6 points.
Although there was a modest pick-up in activity in April, overall, Scotland’s private sector suffered a drop in output for the fifth time in six months in May, which partly explains the continued negative net balance. More positively, small businesses in Scotland anticipate to see profits grow as they head into Q3 2019, with a net balance of 1.0% of firms expecting to be more profitable in the next quarter.
Q2 2019
Q4 2018
Q4 2018
Q2 2018
Q4 2017
Q2 2017
Q4 2016
Q2 2016
Q4 2015
Q2 2015
Q4 2014
Q2 2014
Q4 2013
UK SBI
Source: FSB Small Business Index.
Net balance of small firms in Scotland reporting revenue/profit growth 30% 20% 10% 0% -10%
Revenue
Profit
Q3 2019
Q1 2019
Q3 2018
Q1 2018
Q3 2017
Q1 2017
Q3 2016
Q1 2016
Q3 2015
Q1 2015
Q3 2014
-30%
Q1 2014
-20%
Q3 2013
More small businesses in Scotland reported improving profits in the past three months, although the net balance remains negative. More businesses are still seeing profits fall than rise – continuing the position in every quarter since Q2 2015. A net balance of -12.1% reported that their profits had risen over the last three months. That said, this is an increase of 6.2 percentage points on the -18.3% figure from Q4 2018.
Scotland SBI
Q1 2013
In the midst of a general decline in business sentiment, Scotland’s rise in business confidence comes as something of a surprise, but could be explained by the higher share of small firms in Scotland expecting an improvement in capacity utilisation over the next three months. Alternatively, the Brexit extension in April may have let businesses in Scotland – who were particularly concerned about staffing issues once free movement comes to an end – breathe a sigh of relief that the threat of leaving the EU without a deal had receded for the immediate future.
Q2 2013
-40 Q4 2012
Utility costs were the top driver of small business overhead increases in Q2 2019 – with almost half (49.3%) of businesses experiencing rising cost pressure from this quarter (up 1.5 percentage points on the previous quarter).
10
Q3 2012
Interestingly, despite the rise in confidence, a net balance of -12.1% of small businesses in Scotland reported that their profits had risen over the last three months. While this is an improvement on the -18.3% of small firms reported in Q4 2018, the reading has remained negative in every quarter since Q2 2015.
20
Q2 2012
This quarter, a net balance of 49.5% of small businesses in Scotland reported that they operated at below capacity over the last three months, a 12.6 percentage point decrease on the 62.1% recorded in Q1 2019.
30
Q1 2012
Across the UK as a whole, the small business confidence index remained in negative territory, falling 3.8 points in Q2 to -8.8.
Source: FSB Small Business Index