CONFIDENCE among small and medium sized enterprises declined sharply in Scotland in the last quarter as uncertainty about the economy weighed on sentiment while costs rose, a survey has found.

The latest SME business heath check research for Clydesdale Bank owner CYBG found the reading on the confidence index fell to just 13 in the final quarter of 2017 from 21 in the preceding three months.

The highest possible reading is 100.

The overall health check reading in Scotland fell to 43 from 48 based on measures such as sales and employment.

CYBG chief executive David Duffy said: “SME confidence appears to be in short supply as many small firms are seeing rising business costs alongside continuing skills shortages.”

He added: “Businesses are scaling back their investment and borrowing due to the wider economic uncertainty, contributing to the decline in the Index.”

He said SMEs in Scotland would welcome more incentives to address skills shortages or further tax reductions to manage costs and restore confidence.

The health check reading in the UK fell from 48.4 to 43, the lowest level since 2014.

The index reading has fallen for five quarters running. CYBG said this suggested the business and macroeconomic environment had worsened since the EU Referendum in June 2016 amid the Brexit negotiations.

CYBG, which also owns Yorkshire Bank, completed the health check with the Centre for Business and Economics Research.

In January it reported “continued momentum” onlending to SMEs in the three months to December 31.