Business optimism amongst Scottish smaller firms is at its strongest since the summer of 2015.
The latest Federation of Small Businesses (FSB) figures show the average Scottish business is now more hopeful about prospects than its UK-wide equivalent for the first time since the third quarter of 2020.
Its Scottish small business confidence index rose to +20.5 points this summer, from +18.8 points in the first quarter of the year.
The equivalent UK-wide figure fell to +18.6 points from +27.3 points in the first three months of 2021.
The index measures whether firms believe trading conditions will improve or deteriorate over the next three months.
However, almost two thirds (64%) of Scottish firms reported in an increase in running costs in comparison to this time last year, while only 8% said their overheads had decreased.
More Scottish firms also believe their profits will fall over the next three months, than those who think they will increase.
Andrew McRae, FSB Scotland policy chair, said: “Despite punishing increases to overheads and fears about profits, firms north of the border are the most confident they’ve been in years that trading conditions will improve.
“But this post-lockdown positivity won’t last unless policymakers get behind our local firms during the recovery - that means taking steps to tackle spiralling overheads.
“It means ensuring that smaller firms aren’t crushed by the debts they took on to survive - and it means providing new protections for the self-employed so that we can encourage the next generation of entrepreneurs.”
According to the research, two fifths of Scottish businesses (38%) say they have plans to grow in the year ahead, while a fifth say they plan to downsize, and a further 12% plan to sell, or close their business (5%).
Firms with expansion ambitions were asked to identify the biggest barriers to growth: three fifths of Scottish businesses cited the domestic economy (59%), just over a third highlighted consumer demand (36%), and just under a third warned of the problem of accessing skilled staff (32%).
McRae added: “As the economy has reopened, skills and staff shortages have given firms across Scotland a headache - isolation rules and a reduction of workers caused by the UK leaving the EU are amongst the factors that have been blamed.
“Decision-makers in Edinburgh and London need to look at their labour market, skills and public health policies to ensure they’re geared up for the recovery.”
The FSB surveyed 1,561 small firms for the second quarter index between 24 June and 9 July, with 171 responses from Scotland.
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