Survey: Fewer Scottish small firms planning to invest

The survey found 29% of Scottish firms expected further declines in revenue in the next three months

Confidence has slipped in Scotland's small businesses, with evidence that a falling number of companies are planning to invest.

Findings from the Federation of Small Businesses (FSB) suggested fewer firms expect business conditions to improve in the next three months.

Its small business index also indicated a rise in the number of companies expecting it to worsen.

The proportion of firms planning to invest was lower than the UK average.

The findings were in line with the quarterly Business Monitor survey published this week by Lloyds TSB Scotland.

The FSB survey found a big gap between those experiencing falling revenue and those saying it has been rising.

Some 29% of firms expect further declines in the next three months.

In the FSB survey of 270 firms, 16% expected to reduce investment significantly, whereas that was true of 10% in the first quarter of this year.

That contrasted with 8% of small firms across the UK expecting to increase capital expenditure. Northern Ireland and Wales had worse investment prospects than Scotland.

'Disappointing news'

"As business investment is traditionally a driver of economic recovery, these latest figures are disappointing news, weighed down as they are by low confidence levels and an uncertain outlook," said the FSB analysis.

Slightly more firms were found to be reducing their headcount in the third quarter of this year, and although the falling trend was small, it has now continued for nine quarters.

The survey also indicated that more firms found availability of credit to be a problem than those who found its cost was unaffordable. Some 74% of the firms surveyed said availability of credit was either "quite" or "very" poor - slightly down on earlier this year.

That was while 61% found credit to be either quite or very unaffordable.

FSB Scottish policy convener Andy Willox said low consumer and business confidence was putting small businesses off investing.

"Rising overheads, big business customers paying late and a lack of flexible, affordable finance are compounding this uncertainty," he said.

"There are well-meaning initiatives to boost confidence out there, but we need to get to grips with the details now if they are going to work to the extent we need.

"The repeated initiatives to boost bank lending, for example, can't simply get more funds at a lower rate to those who would have received them anyway."

He added: "Any new public construction projects must be the right ones, with the money being spent to benefit our economy, not a handful of multinational construction firms.

"And initiatives to boost jobs must be designed around the needs of the small businesses who will be hiring, not around who fits into a box the neatest."