Business confidence hit, as GDP revised down – Daily Business

Business confidence has plunged to a three-month low, with Scotland suffering a particularly deep dive, according to the latest Lloyds Banking Group business barometer.

The poll of 1,200 businesses, conducted between 2 and 16 September, found that confidence across the UK in September fell by 3 percentage points to 47%, while north of border it fell by a huge 16 points to 48%.

Despite the sharp dip in Scotland, Bank of Scotland, a division of Lloyds, said underlying numbers remain strong.

The survey coincides with revised figures showing growth across the UK economy was weaker than previously thought over the spring.

The Office for National Statistics (ONS) said gross domestic product (GDP) increased by 0.5% between April and June, revised down from an initial estimate of 0.6%.

Growth was driven by an increase in the services sector, while the manufacturing and construction industries industry dragged on the headline figure, the ONS said.

Commenting on the Lloyds survey, Hann-Ju Ho, a senior economist in its commercial banking unit, said: “The more mixed picture for economic optimism points to some businesses maintaining a degree of caution. While we still expect economic expansion, it may occur at a slower rate than the first half of 2024.

“Although overall confidence fell this month, that fall was from an eight-year high and businesses remain positive about their own trading prospects.”.

“The joint-highest result this year could suggest that respondents still see a positive future for their own companies, which is also reflected in the largely unchanged employment figures.”

Martyn Kendrick, Scotland director at Bank of Scotland Commercial Banking, said: “Despite this dip, which mirrors the broader UK trend, it’s great to see that Scotland remains one of the most optimistic regions in terms of its economic outlook.

“This optimism is well-deserved, given the array of events coming to Scotland this autumn, promising a boost for local SMEs. From Oban’s vibrant Royal National Mod to the Scottish International Storytelling Festival and St Andrews Golf Week where enthusiasts can tee off on the legendary Old Course, the season is brimming with opportunities.

“The fantastic news that Glasgow will host a version of the 2026 Commonwealth Games will bring even more global attention to our shores.

“Businesses have a golden opportunity to tap into this tourism boom.

“We’re eager to see how this temporary dip in confidence will rebound as businesses innovate and diversify to embrace the influx of visitors.”

A number of businesses expressed their intention to raise prices next year, with the figure rising 11 percentage points month-on-month to 65% This was largely driven by small business owners seeking to conserve their own profit margins.

Output projections differed from sector to sector, with falls in the manufacturing and construction sectors more than offset by a small rise in retail and a bigger rise in the dominant services sector.

Paul Gordon, managing director for relationship management at Lloyds Bank business and commercial, said: “These results show that businesses are navigating a complex period, but it’s important to recognise that the underlying numbers remain strong.

“We continue to see robust confidence levels in the key sectors and regions, while firms show increasing confidence in themselves as evidenced by the joint-highest trading prospects results this year.”