Business optimism and output in Scotland at three year low

Business optimism and output in Scotland have fallen to a three year low while hiring intentions are at a two year low according to the latest Business Trends Report by accountants and business advisers BDO LLP.

While some of this can be put down to the uncertainty surrounding the EU referendum vote these figures have been in decline for a year indicating more deep rooted problems with the economy.

Business output – which reflects companies’ experience of orders for the three months ahead – now sits at 99.0 which is down from 104.1 in June 2015. Business optimism – which predicts growth six months ahead – fell to 98.9 and was at 103.9 for the same period last year. UK Manufacturing continues to have the gloomiest outlook, with its optimism sub-index slumping to 83.8.

Uncertainty has also contributed to the continuing slowing rate of job creation. BDO’s Employment Index – which indicates firms’ intentions to hire – has now dropped to 101.4 from 109.1 a year ago and is currently at a two year low.

Martin Gill, Scottish head of BDO LLP, said: “Continued investment is essential as is growth if the Scottish economy is to come through this relatively unscathed. We are at a crucial moment where we must be sensible in protecting the UK economy.

“We need a plan of action now that gives businesses the added confidence to progress with investment plans. This should be a combination of central government investment to support potentially vulnerable sectors such as manufacturing; the encouragement of private funding perhaps through further tax incentives; and growth plans to maintain market share and employment levels. It will be a complex balancing act but sense dictates that we must act in the next few months and years to help Scotland thrive and grow.”