Download UK BUSINESS CONFIDENCE MONITOR REPORT Q4 2012 SCOTLAND BUSINESS WITH CONfIDENCE icaew.com/bcm

UK BUSINESS CONFIDENCE MONITOR REPORT
Q4 2012 SCOTLAND
BUSINESS WITH confidence
icaew.com/bcm
Confidence in Scotland
is fragile
In the Q4 2012 ICAEW/Grant Thornton UK
Business Confidence Monitor (BCM), 59 senior
business professionals in Scotland were
interviewed and record a Confidence Index
score of 1.7. Confidence has been in positive
territory in Scotland since Q2 2012, and while
it remains fragile, it is notably higher now than
a year ago in Q4 2011.
Growth performance has
weakened
Employment prospects
continue to worsen
Businesses in Scotland have been
reporting slowing growth in key
performance indicators during
2012. These findings come as
economic conditions remain tough:
the latest figures from the Scottish
Government suggest that economic
output fell by 0.4% in Q2 2012 in
the third consecutive quarter of
contraction.
Labour market conditions in
Scotland have been worsening in
2012. Businesses have reduced their
headcounts by 0.8% over the past
year, following a downward trend in
net job creation from 0.9% annual
growth in staffing levels in Q4 2011.
In addition, businesses predict
further employment cutbacks of
0.4% over the coming 12 months
as the economic outlook remains
uncertain and confidence stays
low. Weak private sector labour
demand will hold back prospects
for Scotland’s jobless workers as
planned public sector job cuts
continue; there are reports of
extensive job losses to come, as
councils in Glasgow and North
Lanarkshire address budget deficits.
Alongside the weakening economy,
growth in gross profits and sales
volumes has been slowing this year,
rising by their lowest rates since
Q2 2010 at 0.9% and 0.5%
respectively over the past 12 months.
In addition, businesses report
turnover rising by just 1.0% over
the past year, following a general
downward trend from 6.0% annual
growth in the final quarter of 2011.
Despite tough conditions and a
decline in performance this quarter,
expectations have remained
reasonably strong. In line with
confidence readings that have
strengthened since Q4 2011,
turnover is predicted to rise over
the next year by 3.8%, while
gross profits and sales volumes are
expected to grow by 4.0% and
3.6% respectively.
The latest figures from BCM reflect
official statistics that show the
unemployment rate increasing year
on year by 0.3 percentage points
during the three months to August.
The unemployment rate stands at
8.2%, above the national average
of 7.9%.
In October Vion UK announced 1,700
job losses in Scotland, a result of the
closure of the Hall’s meat processing
plant in Broxborn following
unsustainable operating losses.
icaew.com/bcm
Fig. 1 Bcm confidence index trend in scotland
Weak economic conditions
holding back expansion
40
An increasing number of Scottish
businesses are finding it more
difficult to expand into new areas,
with more than one in five (22%)
companies reporting this to be a
greater challenge now than a year
ago, up from just 9% of businesses
in Q4 2010.
30
20
10
0
-10
-20
-30
Scotland
-40
UK Average
-50
-60
Q4
Q1
Q2
2008 2009
Q3
Q4
Q1
Q2
Q3
Q4
2010
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2012
2011
Fig. 2 Q4 2012 – 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
Domestic sales
Exports
Scotland is relatively insulated from
the recession in the eurozone, with
just one third of its goods exports
being sent to the area, compared
to an average of half of exports for
the UK as a whole. However, the
global economy has cooled in 2012,
and slower growth in the US and
emerging economies is likely to be
holding back Scottish businesses’
expansion plans.
In addition, regulatory requirements
are increasingly seen as more of an
issue for doing business in Scotland,
with more than half of companies
(55%) reporting this fact as a greater
challenge now than a year ago.
ICAEW
Institute Members in Scotland PO Box 26198 Dunfermline Fife KY12 8ZD
T +44 (0)131 202 1251
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