Scottish Business Confidence Slips Again

Scottish business confidence dipped by four points during October to 44%, according to the latest Business Barometer from Bank of Scotland. 

According to the survey, that brings Scotland in line with the rest of the UK, with companies across the country reporting lower confidence in their business prospects as the year draws to an end.

Scottish companies reported a drop in confidence about their business outlook since last month, falling two points to 45%. Meanwhile, economic optimism came down by six points to 43%, resulting in the overall confidence rating of 44%—down from 48% in September.

Looking ahead to the next six months, Scottish businesses identified their top target areas for growth as investing in their team, through training (43%), entering new markets (36%) and evolving their offering, for example by introducing new products or services (35%). 

Almost half (49%) of businesses in Scotland also reported that they expect to increase staff levels over the next year, up 23 points on last month.

This marks the second consecutive month that Scottish business confidence has fallen, coming after a 13 point gain during August to 64%.

“This month’s fall in confidence reflects the wider UK trend,” said Martyn Kendrick, Scotland director at Bank of Scotland commercial banking.

“Scottish firms will still have their eyes on growth, and it’s encouraging to see businesses setting out clear plans to capitalise on new opportunities – from investing in their people to tapping into new markets. We’ll continue to be by Scottish business’ sides to help them on each step of their journey.”

Looking across the UK this month, the North East of England was the most confident region in October (63%), followed by London (56%) and the North West (53%), however overall confidence dropped by three points across the country, driven by marginal falls in firms’ confidence about their own trading prospects since September (53% vs. 56%) and the economy (35% vs. 38%).  

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Firms’ trading prospects pulled back for the third consecutive month in manufacturing to 46%, the lowest level since March, and there were also moderate declines of 3 points in both retail and services to 51% and 57% respectively. 

The only sector to buck the trend was construction, with expectations rising to 50%.

Hann-Ju Ho, senior economist at Lloyds Commercial Banking, said: “Although overall business confidence dipped in October, it follows a sustained period of significant optimism, and business sentiment remains above historical levels.

“Encouragingly, many businesses remain confident in their own trading prospects, and the increase in hiring intentions suggests more employers will want to grow their workforce.”

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