www.fsb.org.uk/scotland
SCOTLAND Q3 2018 SMALL BUSINESS INDEX After some encouraging signs in the previous two quarters, Small Business Confidence Scottish small business confidence has collapsed back into 50 negative territory. In the third quarter of 2018, the Scottish small business confidence index fell 18.3 points to -13.2. The index had 40 reached 5.1 in Q2 – its first positive reading in two and a half years. The latest fall leaves the index slightly above the average value over 30 the past two years (-13.8).
-30
Scotland SBI
UK SBI
Q3 2018
Q2 2018
Q4 2017
Q2 2017
Q4 2016
Q2 2016
Q4 2015
Q2 2015
Q4 2014
Q2 2014
Q4 2013
Q2 2013
Q4 2012
-40
Source: FSB Small Business Index.
Net balance of small firms in Scotland reporting revenue/profit growth 30% 20% 10% 0% -10%
Revenue
Profit
Q4 2018
Q2 2018
Q4 2017
Q2 2017
Q4 2016
Q2 2016
Q4 2015
Q2 2015
-30%
Q4 2014
-20%
Q2 2014
Although the negative balance shows fewer businesses expect their revenues to increase rather than decrease, the movement back towards zero shows that business conditions aren’t deteriorating as fast as they were during the first quarter of 2018.
-20
Q4 2013
Small businesses in Scotland report a worsening outlook for revenues over the next three months. In the third quarter of 2018 a net balance of +7.7% of small businesses in Scotland reported that their revenues had declined over the last three months. This was an improvement on the +13.5% who had seen a drop in Q1 2018. Expectations for the coming three months show a continuation of this trend as the net balance moves to -2.2%.
-10
Q2 2013
The latest fall in confidence is likely to reflect significant Brexit-related uncertainty following the Cabinet’s split over its preferred negotiating stance. While a causal link is hard to prove, it would be surprising if the uncertainty around the Brexit process and the possibility of a “nodeal” exit had no impact on business sentiment. Underlying structural weakness in certain sectors is also becoming apparent as consumerfacing firms deal with the consequences of a long term squeeze on real pay growth.
0
Q4 2012
Small business confidence across the UK falls back in Q3. The Small Business Index (SBI) for the UK fell from +12.9 in Q2 2018 to -1.7 in Q3 2018. This is only the third time the index has dropped into negative territory since the start of 2013. By contrast, an uptick in the SBI between Q1 and Q2 coincided with an expansion in the UK economy of 0.4% over the second quarter of 2018. This followed disappointing growth of 0.2% in Q1 as a number of sectors were disrupted by poor weather conditions.
10
Q2 2012
Overheads also rose for the majority of Scottish small businesses in the 12 months to Q3 2018. Higher oil prices and labour were the most significant drivers of cost increases during the quarter.
20
Q2 2012
Small business confidence also deteriorated across the UK with the index falling by 14.6 points. Alongside the decline in confidence, a greater number of Scottish small businesses saw revenues fall rather than rise in Q3. Although on an upward trend, 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