NEARLY two-thirds of Scottish businesses which trade with the European Union have experienced “negative” or “very negative” impacts on this activity since the end of the Brexit transition period on December 31, a key survey reveals.

While 64% reported such effects, only 3% cited positive impacts, according to the latest business monitor conducted by the University of Strathclyde’s Fraser of Allander Institute and published yesterday in partnership with law firm Addleshaw Goddard.

Fraser of Allander warned of the “long-term impact” of Brexit.

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The first-quarter survey, of around 500 firms, meanwhile showed a rise in Scottish companies’ optimism about their prospects on a six-month horizon, with the easing of the latest coronavirus crisis lockdown. This rise in confidence was broadly based, across sectors. The survey reveals, overall, Scottish companies expected an increase in business volumes and employment over the next six months.

Mairi Spowage, director of Fraser of Allander, said: “As the country starts to emerge from a sustained period of lockdown, it is evident that this is a catalyst for the increased levels of optimism across all sectors.”

She added: “Despite the increase in positive sentiment, we shouldn’t be disillusioned to think the economy will return to pre-pandemic levels quickly. We are still contending with the fallout of Brexit which has created negative trading conditions for firms across the board. These challenges are likely to have a long-term impact. However, generally, we can remain confident that this will not hinder progress towards a strong economic recovery.”

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The survey found 89% of Scottish firms now rate their chances of survival over the next six months as somewhat or very likely. This is up from 79% in the previous quarterly survey. Accommodation and hospitality continue to have the lowest sentiment of all the sectors of the economy, although expectations for the next six months have improved among businesses operating in this area.

Meanwhile, 25% of firms expect strong or very strong Scottish economic growth in the coming 12 months. This is up from 8% in the previous quarter.

Many businesses reported homeworking has caused issues in “performance managing” staff, productivity, workplace innovation and organisational culture. But 27% of firms plan to reduce their office footprint permanently.