CONFIDENCE among Scotland’s small and medium-sized firms plunged in the third quarter, a survey by CYBG shows, with Brexit-related political and economic uncertainty and falling oil prices cited as likely drivers.

The drop in confidence arose even though CYBG’s overall health check index for Scotland’s small and medium-sized enterprises (SMEs) edged up by one point to 42 points, the highest reading since the third quarter of 2017.

This index, produced in partnership with the Centre for Economics and Business Research, is based on business costs, gross domestic product, revenue, net business creation, lending, capacity utilisation and employment, as well as confidence.

The Scottish SME confidence index dropped by 17 points to 40 points. CYBG’s confidence index for the SME sector in the UK as a whole tumbled even more sharply, by 23 points to 34 points.

Gavin Opperman, group customer banking director at CYBG, said: “The political and economic uncertainty driven by Brexit have sowed seeds of doubt and businesses have made it clear that they are unsure about what 2019 holds for them.”

Research conducted as part of CYBG’s latest survey indicates Scotland is, among the nations and regions of the UK, the second-most vulnerable to Brexit, behind only Wales. CYBG notes 42 per cent of Scottish SMEs surveyed import goods or services, or both, from other EU countries, the highest proportion anywhere in the UK.

Reflecting on the fall in Scottish SME confidence, CYBG said: “This could be partly explained by falling oil prices, which could impact the local economy and employment levels.”