Cautious return to confidence on economic outlook for Scottish SMEs
At Close Brothers Asset Finance, we have a long history of commissioning independent research to ensure we understand what business owners’ priorities are. In this article, we take a closer look at Scottish companies’ views on four key metrics:
Appetite for investment
In line with the UK as a whole, Scottish firms’ appetite to invest fell (from 77% in September 2023 to just 59% in January 2024), indicating a softening in investment confidence.
From a sector perspective, all experienced a drop in sentiment in this marker – significant in some cases, as with Services (71% to 59%) – apart from Transport and Haulage - where the percentage of firms wanting to invest improved from 62% to 77%. ?
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Missed opportunities
The number of companies that have missed business opportunities because of a lack of available funding rose for Scottish companies, putting them on a par with their counterparts from other regions. Even so, this latest figure is in line with the more normalised levels achieved for this question, last seen in May 2022.
At 41% (Sept 2023: 26%), Transport & Haulage saw the biggest difference in sentiment, when compared to the previous research period.
Economic outlook
Confidence in the macroeconomic outlook among Scottish SMEs has improved significantly in 2024, with 52% confident the economy will grow in the coming 12 months, compared to 38% in September.
However, while this is a step in the right direction, it’s worth remembering that in November 2021, 75% of respondents were positive about the economy, which means we are still some way off previous highs.
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Predicted business performance
Predictions about future business performance rose slightly, in line with the rest of the UK. What hasn’t changed is that most firms expect to continue treading water in 2024, with their prospects remaining unchanged.?
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Our view
Matt Roper, CEO of Close Brothers’ Commercial business, said: “The recovery in confidence, albeit cautious, among the UK’s small and medium business owners continues, is clearly positive news.
“However, our research reinforces the feedback we’re getting from the stakeholders in our key sectors that the recovery in sentiment very much depends which industry they operate in.
“Our commitment to the SME community is that we will continue to work with firms through the cycle, providing expert advice and building long-term relationships, as we’ve always done.”
Methodology:*
All figures, unless otherwise stated, are from a Censuswide survey conducted in January 2024. The survey canvassed the opinion of over 1,200 senior members of the professions across the UK on a range of issues affecting their businesses.