A leading business group has called for urgent improvements to Scotland’s infrastructure as it revealed a modest upturn in economic sentiment.
New research by the Federation of Small Businesses Scotland shows private sector confidence rose slightly in the first quarter of the year.
The improvement ended a near two-year run of declining business confidence north of the border.
However, companies remain far less bullish about their prospects than counterparts across the wider UK and the data suggests the Scottish economy is unlikely to rebound in the short-term with the majority of firms polled expecting to see further deterioration in the marketplace.
FSB Scottish policy convener Andy Willox said improvements in optimism were welcome but they were from a low-base starting point.
“Scottish business confidence couldn’t fall much further at the end of 2016,” Mr Willox said.
“A bounce at the start of this year is welcome, but looks like it will be tricky to sustain given that firms are reporting falling revenues.”
The state of the domestic economy – official statistics show it contracted by 0.2% in the fourth quarter of 2016 – was highlighted by almost half of respondents as the biggest barrier to growth.
Mr Willox added: “Too few Scottish businesses have faith that our economy is travelling in the right direction.
“The UK Government needs to convince firms that their plans for Brexit will safeguard their interests.
“The Scottish Government and our local councils also need to put local growth at the top of their agenda.”
FSB research suggests the average small employer is facing a £2,600 bill from changes to the National Living Wage and was also facing a squeeze from other cost pressures.
Mr Willox said addressing vital infrastructure issues was key to driving sustained economic growth.
“While economic silver bullets are in short supply, there’s plenty to be done to help firms drive local growth,” he continued.
“For example, if we want to see smaller firms continue to create jobs, an expansion to the employment allowance must be delivered.
“In addition, Scotland’s smaller firms are now seeing overheads rising, while they continue to be owed billions of pounds in big business late payments.
“Efforts to address this problem seem to have stalled – we need to see them kick-started.
“Closer to home, a third of our local roads are in an unacceptable condition and Scotland lags behind England on every measure of digital connectivity.
“We need urgent action to fix our broken local infrastructure.”
business@thecourier.co.uk