Scottish business confidence fell to a record low in June, according to the latest Accenture / S&P Global UK Business Outlook, but remains stronger than the rest of Europe.

While the findings come amid global economic uncertainty, a net balance of +17% more private sector firms forecast their activity to increase over the coming year. This is half the level recorded in February (+34%) and is now weaker than most other regions in the UK.

The Southeast (excluding London) and the West Midlands are currently seeing the most confidence (at 43% and 39% respectively), while the EU average is +16%, with the UK recording an index of +28%.

In Scotland, expectations for profits have fallen into the negative (from 14% to -4%) for the first time and plans for recruitment have also dipped (from 14% to 1%) over the four months from February to June, with rising inflation, fuelled by increased energy costs, continuing to be the critical factor.

More positively, optimism is strongest across the financial services sector and investment expectations in capital projects and R&D saw a slight overall upturn (capex up 5% and R&D up 2%).

Commenting on the data, David Caskie for Accenture in Scotland, said: “Business confidence here in Scotland, like in the rest of the UK, has clearly been knocked by mounting concerns around inflation, pressure on profits and economic uncertainty.

“The signs are that investment is being focussed on resilience through spend on capital projects but this still needs greater focus.

“This is a time to look long term and invest where possible, not losing sight of critical targets such as net zero, ensuring that the right investments and strategies are in place to emerge from this period of uncertainty in the strongest position to take advantage and market share going forward.”

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The country is seeing a fall in business confidence despite news from earlier this month from a Scottish Enterprise study that equity investment in Scottish businesses increased by 36% in 2021.

According to the 2021 Risk Capital Market report, which examines the performance of the Scottish equity investment market compared with the other nations and regions of the UK and is based on Beauhurst data, investment in Scottish businesses increased to £690 million in 2021, up from £509 million in the previous year.

In addition, the Scottish Enterprise data revealed that investment market in the Scottish market is among the best-performing in the UK behind the ‘Golden Triangle’ of London, the South-east and East of England.

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