A majority of small Scottish firms expect business conditions to worsen, according to a quarterly report.
The Federation of Small Businesses (FSB) found Scots business owners are among the gloomiest in the UK, with a majority pessimistic for the first time since 2013.
Their Small Business Index for the latest quarter stands at -2, down from +20 at the same point a year ago.
The index also found small business confidence in the UK at its lowest level in around three years.
The report comes as First Minister Nicola Sturgeon, shadow chancellor John McDonnell and Scottish Conservative leader Ruth Davidson line up to address delegates at the organisation’s annual
conference at Glasgow’s SECC.
Andy Willox, FSB Scottish policy convener, said: “Scottish firms whose prospects are indirectly or directly allied with the state of the oil and gas industry are of course facing gruelling trading conditions.
“But the pressures on the massive services sector are also taking their toll. This could explain why Scottish confidence figures lag behind even the depressed numbers for the UK as a whole.”
Almost two-thirds, or 64%, of Scottish business owners highlighted the state of the domestic economy as a barrier to their own business growth, according to the study.
It also found that small business revenues and profits are down, although firms do predict improvements.
And FSB said it found a strong indication that new challenges facing small businesses – including the national living wage, pension auto-enrolment and plans to introduce mandatory quarterly
digital tax reporting – may also be contributing to the decline in business sentiment.
But investment plans were said to have “held steady” and credit conditions continue to improve.
Mr Willox added: “We need to create the right conditions for more local, small and micro-businesses to establish, grow, employ and invest. The next Scottish government must spend wisely, tax
fairly and regulate sensibly.
“With less than two months until the Holyrood elections, we need to hear how Scotland’s political parties plan to boost local economies whatever the price of Brent crude.”