Monday, 13 July 2021 09:09

Business confidence drops to 2015 low

Martin Gill, head of BDO LLP in Scotland

Business confidence in Scotland has fallen to its lowest level in 2015, amid the Greek debt crisis and a potential slowdown in China’s economy, according to accountants and business advisors BDO LLP.

The firm’s latest Business Trends Report found its Optimism Index for June recorded 103.9, reflecting Scottish firms’ concerns that global financial events could soon affect their own prospects.

BDO’s Manufacturing Optimism Index has dropped even further, to 98.5 from 103.4. The figure is now below the long-term trend rate for the first time in two years. The accountants said this shows “that little progress has been made in rebalancing the economy away from the service sector and demonstrating how global uncertainty could hamper the exports market.”

The report also found that global concerns could soon hit employment levels. While hiring intentions remain relatively strong, BDO’s Employment Index suffered its sharpest percentage decrease since November 2011, suggesting that business concerns for the global economy could soon result in reducing hiring intentions in Scotland.

Martin Gill, head of BDO LLP in Scotland, said: “We thrive by being an outward looking economy, so to see the dynamo that is the Chinese market slowing down is clearly playing on the minds of exporters. Our exports market is a key strength of the economy. We need to do all we can to maximise its potential in growing and re-balancing our economy as a whole.

“The Chancellor missed an opportunity to help exporters, and specifically those manufacturers that drive foreign trade, in last week’s Budget. The government must cut the tax barriers that exporters face as a priority. Introducing a VAT zero rating for suppliers to companies that export would be a good starting point.”

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