Business confidence in Scotland rose 13 points during August to 55%, according to the latest Business Barometer from Bank of Scotland.
Companies in Scotland reported higher confidence in their own trading outlook month-on-month, up 14 points at 65%. When taken alongside their optimism in the economy, up 11 points to 45%, this gives a headline confidence reading of 55% (vs. 42% in July 2026).
Scottish firms’ confidence in their own trading outlook was driven by stronger customer demand (71%) and increased investment in technology (50%), while confidence in the economy was driven by rising market demand (63%).
A net balance of 44% of businesses in the country also expect to increase staff levels over the next year, up seven points on last month.
Business confidence in Scotland still sits above the 12-month average of 46%, with its highest figure of 52% in October 2026.
Looking ahead to the next six months, Scottish businesses identified their top target areas for growth as evolving their offering (49%), for example by introducing new products or services, entering new markets (46%) and investing in their team (39%), for example through training.
The Business Barometer, which surveys 1,200 businesses monthly and which has been running since 2002, provides early signals about UK economic trends both regionally and nationwide.
Martyn Kendrick, Scotland director at Bank of Scotland Commercial Banking, said: “Confidence has increased among Scottish businesses this month, with firms feeling more optimistic about both their own trading outlook and the wider economy.
“What stands out is that businesses aren’t just feeling more positive, they’re planning for growth. Stronger customer demand is giving firms confidence to invest, whether that’s in technology, new products and markets, or their people.
“With hiring expectations also rising, there’s a clear sense that Scottish businesses are looking ahead, ready to capitalise on opportunities for growth.”
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Overall, UK business confidence increased four points in August to 53%, the highest reading since the start of the Middle East conflict in March (55%) and above the 12-month average of 47%.
This was driven by a second month-on-month increase in economic optimism, up 18 points since June.
Optimism in the wider economy rose seven points to 49%, compared to a 12-month average of 37%. Of those surveyed, 64% said they were optimistic (up five points from July) in the wider economy, while those who felt pessimistic decreased by two points to 15%. The main factors cited by firms who felt more positive included stronger customer demand and improving financial conditions.
Businesses’ own trading outlook improved two points to a three-month high of 58% in August, compared to a 12-month average of 56%. Sixty-six percent of firms (up one point from July) expect an increase in output over the year ahead, while those expecting a decrease in activity reduced by one point to 8%. Among firms expecting stronger activity, the main factors were stronger customer demand, increased investment in capacity or tech and improved supply chain conditions.
Amanda Murphy, CEO Lloyds Business and Commercial Banking, said: “It's encouraging to see business confidence rise for the second month in a row, reaching its highest level since March.
"While international firms remain more confident, it’s good to see domestic companies register a strong month-on-month increase.
"Overall, businesses are reporting stronger customer demand, greater optimism about the wider economy and growing confidence in their own trading outlook, all of which will be helping to support investment and growth plans.
"While businesses continue to operate in a challenging environment, easing cost pressures and fewer firms expecting to raise prices in the coming year, should allow them to focus less on managing headwinds and more on pursuing growth."