Scotland-based small and medium enterprises (SMEs) appear much less positive about business growth than the rest of the UK, according to new research.

Data released by Hitachi Capital Business Finance suggests that Scottish SMEs are around half as confident about growth as areas such as London.

Overall, 26% of small business owners in the UK predict growth in the next three months. However, only 17% of owners in Scotland expect growth over the same period.

Whilst directors in the finance/accounting (40%), media/marketing (36%) and IT/telecoms (36%) sectors drive UK growth predictions, the Hitachi Capital data also revealed areas of concern.

Joanna Morris, head of insight at Hitachi Capital Business Finance said: “We live in unprecedented times and the surprises from our latest quarterly study reflect this.

“Overall, it is hugely positive that the growth outlook for the small business sector as a community remains strong. Our study showed how dramatically confidence fell with the first lockdown in March 2020, and whilst growth forecasts have not matched pre-pandemic levels, the consistency of more than one in four predicting growth over each of the last three quarters is a firm and positive building block for the British economy. If we dig deeper into the detail, there are areas of concern.

“When it comes to growth plans, Scottish and Welsh small businesses are lagging behind their English counterparts.”

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SMEs that transitioned to home working were more likely than the national average to predict growth (31% versus 26%), but less so for businesses that had to restructure their business model to survive the lockdowns.

Morris continued: “Whilst home-working has helped businesses to plan and grow, attempts to reinvent businesses has seemingly been more problematic.

“And there is no question that Brexit is impacting the many small businesses that rely on exports – and at the very time when the UK market is in lockdown.

“These are challenges that need to be tackled to ensure the UK small business sector does not become polarised between those who do very well and those facing closure.”

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Scottish SMEs could soon begin to see a light at the end of the tunnel after the Scottish Government released its figure for the Scottish budget.

The 2021-22 Scottish Budget will provide around £1.1 billion in support for jobs and skills to help the economy recover post-Covid.

Finance Secretary Kate Forbes said that the new investment will also help to drive economic recovery, bolster public services, and support families.

As well as this, there has been several announcements already in 2021 of success for small Scottish firms despite the pandemic.

Last week of Scottish tech startup Stellar Omada announced it has seen sales quadruple in its second financial year, bringing in full-year revenue of £10.2 million.

Edinburgh MedTech firm Manus Neurodynamica also closed a £1.2 million funding round to support the launch of its digital pen which provides an early warning of Parkinson’s disease.