The Elite Ayrshire Business Circle

The Elite Ayrshire Business Circle

Thursday, 17 January 2008

Scottish businesses are more confident than their UK counterparts

BUSINESS confidence may have been dented by the tougher conditions of recent months, but Scottish firms are facing 2008 with confidence, according to the Business in Britain survey from Lloyds TSB Commercial.

The report, based on the responses of more than 1,800 UK firms, shows that the balance of firms expecting improved, rather than worsening conditions over the next six months stands at 23 per cent in Scotland compared with 18 per cent UK-wide. Scottish businesses report stronger figures for confidence in future orders, sales and profits.

Scotland also reports strong turnover figures in the last six months, with 56 per cent of businesses reporting an increase, 27 per cent no change and 17 per cent a decrease. This compares with 47 per cent of UK businesses reporting an increase, 30 per cent no change and 21 per cent a fall.

The balance of firms which increased rather than reduced employee numbers in the last six months stands at 28 per cent for Scottish businesses compared with just 8 per cent of UK respondents. For the coming six months, the balance of those expecting to recruit stands at 17 per cent in Scotland and 8 per cent for the UK.

There is little evidence that businesses are feeling the pinch on their finances, with only 13 per cent of Scottish firms reporting strains on cash flow. This is the lowest figure reported by any of the regions in the UK, and lower than the national average of 21 per cent. Even the national average is still far below the peak reached during the 1990s recession, when 56 per cent of firms reported problems with cash flow.

Despite the tougher times ahead, firms are still optimistic about their scope for increasing prices, in the hope of countering falling sales. The balance of UK firms expecting to be able to raise prices has reached a 15 year high of 34 per cent - up from 23 per cent in the last survey. The figure for Scotland is higher still at 39 per cent. This could have implications for the Bank of England, which has to consider inflationary pressures when making interest rate decisions over the coming months.

Lloyds TSB Scotland corporate and commercial director Manus Fullerton said: “Across the board, Scottish businesses have presented stronger results than the UK average, suggesting they are in robust shape. There is no shortage of talk of difficult times ahead economically, but Scotland appears to be in confident mood – a mood echoed by the findings of our Scottish Business Monitor earlier this month.

“Businesses may well tighten their financial belts in the months ahead, but there is still little evidence of the gloom and doom gripping Scottish commerce.”

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