Confidence amongst Scottish small businesses is showing signs of recovery after a four-year low, despite a mounting costs crisis, new data from the Federation of Small Businesses (FSB) shows.
FSB’s Small Business Index (SBI) in Scotland rose by more than 50 points in the first quarter of 2025, although it still remained in negative territory at -15.29. However, that’s when compared to a four-year low of -67.18 in the previous quarter.
The increase in confidence comes despite growing concerns about rising business costs, with a net balance of 87.7% of respondents experiencing higher overheads. The main reasons for this include rising utility bills (61.9%), labour costs (50%) and taxes (38.3%).
There was also evidence of a negative impact on jobs, with the proportion of firms reducing staff numbers remaining higher (17.4%) than those recruiting (10.3%).
Guy Hinks, the FSB Scotland Chair, said: “These increased confidence levels are welcome after seeing such a drop in the final quarter of last year, but unfortunately the outlook for small businesses in Scotland remains negative.
“The real test is whether that trend continues. With the growing pressures facing small businesses, that is very much in the balance. It’s vital now that the Government allows small businesses to get on with what they do best, serving their customers’ needs and supporting jobs.
“It’s clear rising costs and higher taxes are having a significant impact. Small businesses need to see practical and urgent government action to ease these pressures, including lower taxes and action to tackle late payments - big customers effectively treating their small suppliers as a free overdraft and paying them when they feel like it - if this renewed confidence is to turn into meaningful and sustained growth.”
A net balance of 46.37% of businesses reported a drop in profits over the last three months, an increase from 36.7% in the previous quarter. Looking ahead, a net balance of 26.6% of businesses are expecting to grow over the next 12 months, with 44.4% predicting growth and 17.8% expecting to contract.
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