New reports out today from banking groups CYBG and Bank of Scotland (BoS) paint a less than rosy picture of the current mood among Scotland’s businesses.
They are in stark contrast to two recent reports showing a rise in confidence in the North sea oil and gas industry.
The contrasting mood barometers suggest wider political and economic uncertainty could stymie a recovery in the fortunes of many of the north and north-east firms who have been impacted by low oil prices.
CYBG, owner of the Clydesdale and Yorkshire banks, says its measure of the health of small and medium-sized enterprises (SMEs) across the UK has fallen to its lowest reading in three years.
Scotland is among the poorest performing areas in the new quarterly index – ranked third bottom among 12 regions.
According to CYBG, whose data was compiled by the Centre for Economics and Business Research, most of the indicators of SME health north of the border have fallen since the final quarter of last year.
The Glasgow-based banking group adds: “The decline highlights a more challenging business and economic environment faced by the nation’s SMEs.
“Scotland’s economy has suffered under the drop in global oil prices since 2014 and was among the slowest growing areas in the UK for the past couple of years.”
“Encouragingly, the Scottish economy added jobs in Q1 2017 for the second successive quarter, although the rate of growth was only slight.
“Lending to Scottish SMEs fell, according to latest data, marking three consecutive quarters of decline, while business costs faced by SMEs increased at a stronger rate.”
In its latest Business in Britain report, now in its 25th year, BoS says Scottish firm’s confidence has fallen over the past six months.
The drop is not huge – the bank’s confidence index taking in expected sales, orders and profits shows only a slight fall and the balance of firms with an upbeat outlook, 19%, is still in positive territory – but English and Welsh firms were much more bullish about their prospects.
Fraser Sime, regional area director for SME, BoS, said yesterday the fact there was only a small drop in confidence north of the border, despite political uncertainty from a snap election, was actually a positive sign.
Mr Sime added: “The outlook for the external environment remains mixed, with details of Britain’s exit from the EU still to come, but businesses have been working within those parameters for a while.
“For the moment, Scottish businesses are taking this in their stride until there is a clearer sense of what it will mean for them in the short and medium term.”
Last week, a BoS report has highlighted rising confidence and slowing job cuts in the North Sea oil and gas industry. It was the second such morale booster for the sector this month, following similar study findings from Aberdeen and Grampian Chamber of Commerce.
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