www.fsb.org.uk/scotland
SCOTLAND Q4 2020 SMALL BUSINESS INDEX Businesses in Scotland were the UK’s most pessimistic in Q4 2020, Small Business Confidence according to the latest FSB Small Business Index. 60
0 -20 -40 -60 -80 -100 -120 -140
Scotland SBI
UK SBI
Q4 2020
Q2 2020
Q4 2019
Q2 2019
Q4 2018
Q2 2018
Q4 2017
Q2 2017
Q4 2016
Q2 2016
Q4 2015
Q2 2015
Q4 2014
-160 Q2 2014
New Covid trading restrictions pose considerable barriers to business activity across the UK. As the rate of Covid-19 infections increased over the course of Q4, a wave of new restrictions on businesses were implemented throughout the UK, severely damaging the outlook for businesses. This has manifested in a large fall in the UK-wide SBI, reaching -49.3, down from -32.6 in Q3. The figures for Scotland reflect the fact that much of the central belt was subject to additional regional restrictions from early October, followed by much tighter measures implemented across the entire nation later in the quarter.
20
Q4 2013
Though business pessimism was found across the UK’s regions and nations in Q4, the results from Scotland are stark. Not only was the Index reading of -69.0 the lowest score across all regions and nations, Scotland also suffered the largest fall in the Index between Q3 and Q4, amounting to a decrease of 42.7 points. This represents a significant shift as Scotland had previously stood as one of the least pessimistic areas in Q3.
40
Q2 2013
Survey work that was carried out between 14th and 21st December 2020 shows that small business confidence slipped to -69.0 in Q4, the second-lowest reading on record.
Source: FSB Small Business Index.
Scottish businesses saw the UK’s worst gross profit performance in Q4. The net balance of Scottish firms reporting gross profit growth stood at -51.1% in Q4. This is significantly lower than the UK-wide average of -38.8% and, indeed, represents a lower score than any other UK region or nation.
10%
-10%
-30%
-50%
-70%
Revenue
Profit
Q1 2021
Q3 2020
Q1 2020
Q3 2019
Q1 2019
Q3 2018
Q1 2018
Q3 2017
Q1 2017
Q3 2016
Q1 2016
Q3 2015
Q1 2015
Q3 2014
-90% Q1 2014
Scottish businesses have the weakest growth expectations. A net balance of 6.0% of Scottish businesses expect to upscale in the coming 12 months, representing the lowest figure across the UK and standing well below the UK-wide average of 18.2%. The negative growth outlook is further compounded by the fact that businesses in Scotland are the most likely to anticipate permanent closure in the near future. 6.0% of Scottish businesses expect to close their doors for good over the coming year, 1.7 percentage points above the UK-wide average.
30%
Q3 2013
Such weakened profits reflect the disruption to business activity induced by the pandemic and associated restriction measures. The financial impact has been most pronounced amongst service-based industries reliant on face-to-face contact. As in the spring of 2020, hospitality represents one of the worst hit sectors, with businesses in Scotland being particularly affected by policies such as the 6 pm curfew and a ban on alcohol sales, implemented in certain localities from early October, as well as the outright closure of venues under subsequent tighter sets of restrictions.
Net balance of small firms in Scotland reporting revenue/profit growth
Q1 2013
Given the link between short-term financial performance and overall business confidence, it comes as little surprise to see Scotland rank the lowest on both the headline Index and gross profit measure. Within the net balance figure, more than two thirds (67.0%) of SMEs in Scotland saw their gross profit levels decline in the final quarter of 2020.
Source: FSB Small Business Index