Scotland’s small business community has regained some confidence following a “complete collapse” in optimism earlier this year, according to new research.
The Federation of Small Businesses (FSB) said its survey showed an improvement in this year’s second quarter (Q2) of trading.
Its small business confidence index had fallen to its lowest ever figure in Q1.
The FSB warned that some firms expected harder times ahead and the number that had cut staff was at a record high.
- Small firms ‘on knife-edge’ amid virus crisis
- Smaller businesses call for more support
The Scottish government said it had “moved quickly” to provide business with financial support, adding that there was still work to be done to repair the economic damage caused by the coronavirus pandemic.
The FSB said the signs of increasing confidence were welcome, but this optimism had grown at a slightly slower rate on average than across the rest of the UK.
Its small business confidence index “jumped” from -154.8 points in Q1, the lowest ever figure recorded, to -10.1 points in Q2.
The FSB survey suggested the effects of the pandemic on small businesses would be felt hard for some time yet.
Of the 195 Scottish business owners surveyed in June, 25% said they expected their performance to be “much worse” over the coming quarter.
According to the research, the number of small firms in Scotland that had reduced staff over the last three months reached an all-time high – 23% – while the proportion of businesses creating jobs hit an all-time low of 1.5%.
‘Tale of two economies’
Andrew McRae, the FSB’s Scotland policy chairman, said the rise in confidence was good news, but there remained causes for concern.
“Given that so many small businesses were closed up until very recently, this increased optimism is due in no small part to the coronavirus support rolled out at speed by the UK and Scottish governments,” he said.
“But let’s be clear, small businesses are by no means out of the woods.
“These figures tell a tale of two economies – the one that is getting back to business and the one with a much tougher journey back.
“A division has opened up between those that have been able to access support or diversify their operations and those that have gone four months unable to trade or tap into help.”
‘Much work to be done’
Business Minister Jamie Hepburn said the Scottish government had acted quickly to help businesses.
He said: “While it is encouraging that this report suggests business confidence has improved, there is still much work to be done to repair the economic damage caused by the pandemic.
“The Scottish government moved quickly to support businesses during the crisis with more than £2.3bn of support.”
Mr Hepburn said hundreds of millions of pounds had been put towards helping firms to reopen safely and help people who had lost their jobs.