www.fsb.org.uk/scotland
SCOTLAND Q4 2018 SMALL BUSINESS INDEX Scottish Small Business confidence collapses to a record low in Small Business Confidence the fourth quarter of 2018. The Scottish small business confidence 50 index fell 19.5 points to -32.7. Small businesses are renowned for their trademark resilience and agility. However, the current level of political 40 uncertainty has tested their endurance to the very limits and damage is now being done to the small business community and the wider UK 30 economy. This is the lowest level of confidence recorded since the 20 Scottish SBI began in 2010.
-30
Scotland SBI
UK SBI
Q4 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
Q4 2014
-30%
Q2 2014
-20%
Q4 2013
Official data shows that in September to November of 2018, Scotland had a slightly lower employment rate (75.3%) than the UK as a whole (75.8%). While unemployment was lower in Scotland by 0.5 percentage points, this reduced level was slightly offset by a higher rate of economic inactivity. Going forward, though, small businesses in Scotland look to be more optimistic about their ability to take on new staff, with a net balance of 3.9% expecting to expand their workforce in the first three months of 2019.
-20
Q2 2013
Small businesses continued to reduce headcount in Q4. The net balance of small firms increasing employment in Scotland remained negative for the sixth consecutive quarter, at -3.4%. This is a notably different labour market performance to that of the UK as a whole, where a positive net balance of small firms reporting that they have increased employment for the past two and a half years.
-10
Q4 2012
Scottish small businesses temporarily slow the decline in profitability. In the fourth quarter of 2018, a negative net balance of -18.3% of small businesses in Scotland reported that their profits had risen over the last three months. This was an improvement on the -23.9% seen in Q2 2018, although it still shows that fewer firms saw profits rise than fall or hold steady. Expectations for the coming three months predict a reversal of this trend, as the net balance moves back down to -22.8%. Scottish firms continue to report worse performance than the average UK business, with a net balance of -4.3% of small UK firms reporting improved profits during the last quarter.
0
Q2 2012
Small business confidence across the UK also continues to decline. The Small Business Index fell for the second consecutive quarter across the UK, falling by 8.2 points to -9.9 in Q4 2018. This is the lowest index level since Q4 2011 and represents the third lowest level since its inception in 2010. Current surveys paint a mixed picture across different sectors: order books have strengthened for manufacturing and construction firms in November, but declined for the important services sector. With uncertainty lingering over the future of the UK’s relationship with Europe, the effect on business confidence and investment is increasingly apparent.
10
Q2 2012
More positively, Scottish small businesses appear to be more streamlined and profitable than they were last quarter. Fewer firms report they have spare capacity and a higher net balance of firms are reporting increased profits. That said, the outlook is far from rosy. The net balance of respondents reporting improved profitability remains deep in the red and firms expect it to worsen in Q1 2019. Operating costs also continued to climb this quarter, with utilities cited as the primary cause.
Source: FSB Small Business Index