The report revealed something approaching a collapse in Scottish small business confidence following encouraging signs in the previous two quarters, with an 18.3 point fall in the confidence index in Scotland. Across the UK as a whole, the confidence index fell by 14.6 points in the third quarter of 2018.
Revenues continued to fall rather than rise at a majority of Scottish businesses, whilst overheads also rose due to higher oil prices and labour costs, according to the report.
The fall in confidence across the UK as a whole is thought to reflect significant Brexit-related uncertainty and worries about the possibility of a "no-deal" outcome. Weak pay growth is also a factor weighing on consumer-facing firms.
On employment, whilst businesses reported an overall decrease in employment levels, this was against a backdrop of improvement in the three previous quarters and the outlook was also considered fairly positive with a net balance of 3.3% of Scottish firms expecting employment growth in the coming months.
A net balance of 55% of Scottish firms reported that they were operating below capacity over the last three months; a majority expected to continue to operate at below capacity over the next quarter. Perhaps more positively, a net balance of 18.9% expected to increase investment over the next quarter whilst a net balance of 27.3% aspired to grow, either moderately or rapidly, over the next year.