Small business confidence jolted by falling profits

FSB's Andy Willox: 'It is little wonder confidence has fallen'. Picture: Contributed
FSB's Andy Willox: 'It is little wonder confidence has fallen'. Picture: Contributed

THE winning streak in rising profits at Scotland’s small businesses has been busted, ending five quarters of consecutive earnings growth, a new report out today says.

The Federation of Small Businesses (FSB) also says that small firms have become much less confident about their prospects, with its Scottish Voice of Small Business index now standing at just +1.7 points. That is a sharp fall from +26 points at the same time last year, and markedly below the UK figure which stands at +20.3 points.

“The net balance of firms reporting rising profits has fallen into negative territory, at ‑2.8 per cent, ending a run of five quarters of uninterrupted profit growth,” FSB Scotland said.

That compares with a balance of +9 per cent reporting profits growth in the previous quarter.

A balance of +6.1 per cent of Scottish small businesses reported increased turnover in the three months to 20 July, down from a much stronger balance of +17 per cent reporting higher turnover in the same period of 2014.

Andy Willox, the FSB’s Scottish policy convenor, said: “With revenues and profits taking a hit, it’s little wonder that confidence has dropped.”

He said that the latest figures were “a timely reminder that a sustained recovery is far from guaranteed”. The FSB report was based on a sample of 1,570 small businesses across the UK, with 180 small firms surveyed across Scotland between 20 July and 4 August.

A total of 37 per cent of Scottish firms said that credit remained unaffordable, but this is well below the figures in excess of 60 per centy seen in 2012 and 2013, FSB Scotland said.