‘Tale of two economies’ revealed in FSB data
Andrew McRae: ‘many firms are already making very difficult decisions’
Research on small business prospects tells “a tale of two economies”, according to trade group leader Andrew McRae.
The Federation of Small Businesses (FSB) says prospects are increasingly polarised.
A quarter (25%) of Scottish business owners expect their performance to be “much worse” over the coming quarter, whereas one in ten (11%) expect the opposite.
FSB’s Scotland’s small business confidence index leaped from -154.8 points in Q1, the lowest ever figure recorded, to -10.1 points in Q2.
Mr McRae, the FSB’s Scotland policy chairman, said “These figures tell a tale of two economies – one that is getting back to business and one with a much tougher journey back.”
It’s great to see signs of recovery – but we can’t be complacent– Andrew McRae, FSB
He said there was a clear division division 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.
According to the research, the share of small firms in Scotland that have reduced head counts over the last three months is at an all-time high (23%), while the proportion of businesses creating jobs is at an all-time low (1.5%).
Mr McRae added: “It’s great to see signs of recovery – but we can’t be complacent. While government figures don’t yet show a significant surge in unemployment, our statistics suggest that many firms are already making very difficult decisions.
“We need to stem this tide and that requires three things: a concerted push to boost consumer confidence and hence stimulate demand; support to give those looking for work the right skills; and some breathing space to keep small employers – and the jobs they sustain – in business.
“Any recovery we’re seeing is fragile as firms don’t have huge reserves and one shock could cause them real difficulties.”
The new research also shows a surge in small business finance applications – around one in three (30%) have applied for credit in the past three months, up 16 percentage points on the previous quarter (13%) of which 89% were successful.
Mr McRae said: “Without a doubt, the bounce back loan scheme has been successful in getting money to small firms when they needed it the most.
“But the job is not done. Small businesses will need continued access to affordable finance as they get back to business and trade our way back to growth.”
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