Download UK BUSINESS CONFIDENCE MONITOR REPORT Q1 2013 SCOTLAND BUSINESS WITH CONFIDENCE icaew.com/bcm

UK BUSINESS CONFIDENCE MONITOR REPORT
Q1 2013 SCOTLAND
BUSINESS WITH CONFIDENCE
icaew.com/bcm
CONFIDENCE REMAINS IN POSITIVE
TERRITORY IN SCOTLAND
In the Q1 2013 ICAEW/Grant Thornton UK
Business Confidence Monitor (BCM) 52 senior
business professionals in Scotland were
interviewed and record a Confidence Index
score of 5.5. While the Confidence Index
remains in positive territory for the fourth
consecutive quarter, the current reading stands
below the UK average of +12.8 and confidence
remains weak.
PACE OF GROWTH
CONTINUES TO SLOW
LABOUR MARKET REMAINS
WEAK
Data from the Scottish Government
show growth in economic output
has been sluggish, with GDP rising
by just 0.4% over the year to
Q3 2012. Against this backdrop of a
fragile economy, Scottish businesses
report weak growth in several
key performance indicators. Sales
volumes actually declined, falling
by 0.1% over the 12 months to
Q1 2013. Turnover data are slightly
more encouraging, with businesses
recording a modest increase of
0.8% for the year to Q1 2013.
Nevertheless, the last time turnover
growth was slower than this was in
Q4 2009.
Conditions in the Scottish job
market have been weak over the
year. This quarter, companies report
headcounts increasing by just 0.1%
over the previous 12 months. This
follows a trend of falling job creation,
from 0.9% annual staffing growth
in Q4 2011.
Despite weak economic growth
and a decline in key performance
indicators this quarter, expectations
for 2013 have remained relatively
strong as businesses expect better
conditions ahead. In line with
confidence readings, which have
been positive for a year, sales
volumes are predicted to rise by
4.2% over the coming 12 months,
while turnover and exports are
expected to grow by 4.7% and
3.9% respectively.
Data from the Office for National
Statistics show that the Scottish
unemployment rate fell to 7.8% in
Q3 2012, but public sector cutbacks
present a further challenge to the
labour market. These have the
potential to put upward pressure
on Scotland’s unemployment rate,
which is already above the UK
average. A 2012 budget review
recommended reducing Scottish
public sector employment by
between 5.7% and 10% by 2014–15;
while the Scottish government has
stated its hope to avoid compulsory
redundancies, up to 60,000 public
sector jobs could be at risk.
BCM data show that the private
sector expects modest headcount
growth of 1.0% over the next 12
months. If realised, this could help
to absorb some reduction in public
sector employment.
icaew.com/bcm
FIG. 1 BCM CONFIDENCE INDEX TREND IN SCOTLAND
REGULATORY REQUIREMENTS A
GROWING CHALLENGE
40
The proportion of Scottish businesses
finding regulatory requirements to
be a greater challenge has continued
to increase this quarter. Now, 61% of
companies say it is more difficult to
deal with regulation than a year ago,
up from 38% in Q1 2012.
30
20
10
0
-10
-20
-30
Scotland
-40
UK Average
-50
-60
Q1
Q2
Q3
2009
Q4
Q1
Q2
2010
Q3
Q4
Q1
Q2
Q3
Q4
2011
Q1
Q2
Q3
Q4
2012
Q1
2013
FIG. 2 Q1 2013 – SCOTLAND AVERAGE % CHANGE IN …
% 8
Change
7
6
5
4
Versus last 12 months
3
2
Expected next
12 months
1
0
Turnover
icaew.com/bcm
Gross profits
Exports
Number of Employees
Increased financial sector regulation,
particularly rises in capital
requirements, will have affected
banks in Scotland. If it becomes
law, the Banking Reform Bill could
place a further regulatory burden on
Scottish banks as it will enable the
government to break up those which
do not ring-fence their retail and
commercial operations sufficiently.
The Scottish regulatory agenda
could further increase the burden on
businesses. The forthcoming ‘Food
Information (Scotland) Regulations
2013’, may lead to new regulations
for food-related businesses, and the
recent Scottish Government review,
Lower carbon buildings – a review of
energy standards and guidance within
Scottish building regulations, could
see legislation imposing greater
energy-efficiency requirements on
new buildings in Scotland.
ICAEW
Institute Members in Scotland PO Box 26198 Dunfermline Fife KY12 8ZD
T +44 (0)131 202 1251
icaew.com/ims
linkedin.com – find ICAEW
twitter.com/icaew
facebook.com/icaew
© ICAEW MKTPLM12043 02/13