Scottish business owners reveal worries for future

The Herald Scotland

2 days ago

The business group declared that the findings underline the difficulties facing small enterprises following the sharp rise in employer national insurance contributions and national living wage, which took effect in April. It also cited the extra costs and risks which are expected to be imposed by the impending Employment Rights Bill.
The FSB found that more than one-quarter of small businesses (28.7%) expect to contract, close or sell up over the next 12 months. This compares with the 24.5% which expect to grow over the next year, according to the FSB's Small Business Index for the second quarter. The latest results represent both the highest number expecting to contract, close or sell, and the lowest number expecting to grow since the outbreak of the pandemic in the first quarter of 2020.
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Overall business confidence in Scotland fell to a net rating of -35.7, a sharp decline on the first quarter when confidence was measured at -15.3.
UK confidence in the second quarter was -44.1, lower than the score for Scotland.
Guy Hinks, Scotland chair of the FSB, said: 'For the first time since the country went into lockdown, more small businesses in Scotland expect to shrink, close or sell up than expand. That is deeply concerning, not just for thousands of small businesses, their staff and customers, but for the prospects of the whole Scottish economy which is largely driven by SMEs (small and medium-sized enterprises).
'The governments in Westminster and Holyrood have been making all the right noises about supporting the small business community. These stark findings show the urgent need for decisive action.
'At Westminster, that means taking steps to tackle the blight of late payments, the inappropriate use of personal guarantees on business loans and listening to business concerns about the Employment Rights Bill and its dampening effect on firms taking on staff.
'At Holyrood and in local authorities across Scotland, that means ensuring the needs of small businesses are fully taken into account whenever any policy is brought forward, from creating a level playing field for small firms bidding for valuable public contracts to local visitor levy schemes.'
The FSB found nearly half small businesses in Scotland (48%) reported a fall in profits over the last three months, compared with 27% which saw an increase (27%), while twice as many cut staff (18%) as increased employee numbers (9%).
Nine out of 10 Scottish respondents (88%) experienced rising costs in the second quarter, largely because of increases in utility bills, as well as labour and tax costs.
More than half (54%) cited the performance of the domestic economy as the biggest barrier to the growth of their own business, followed by labour costs (41%) and the tax burden (40%).
Nearly one in three (30%) businesses expect to see an increase in profits over the next three months, down significantly on the previous quarter (41%).