Business confidence in Scotland fell nine points during September to -18%, according to the latest Business Barometer from Bank of Scotland Commercial Banking.
Companies in Scotland reported lower confidence in their business prospects, falling five points to -5%. When taken alongside their views of the economy, this gives an overall confidence of -18%.
Across the UK, overall confidence rose one point to 2% as firms’ confidence in their own prospects climbed five points to 13%.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
Fraser Sime, regional director for Scotland at Bank of Scotland Commercial Banking, said: “Ongoing uncertainty continues to challenge many businesses, but there are always some sectors that can prosper in the environments we are experiencing.
“We are by the side of business and recently pledged to lend £1.6bn over the next year to support Scottish firms to capitalise on opportunities to upscale and succeed.
“Despite confidence levels dipping, we are optimistic that they will bounce back once firms get a degree of clarity over their future trading environments.”
Across Scotland, a net balance of 32% of businesses said they felt that the UK’s exit from the European Union was having a negative impact on their expectations for business activity, down six points on a month ago.
National overview
Businesses in the East Midlands showed the most confidence, at 15%, ahead of the West Midlands and Yorkshire (both on 7%).
Scotland is the least confident, 20 points below the national average.
Overall confidence remained the weakest in the manufacturing sector, where it fell by five points to -2%, and the services sector, which remained unchanged at -3%. Overall business confidence in the retail sector rose by eight points to 14%, but fell two points in the construction sector to 10%.
Paul Gordon, managing director for SME and Mid Corporates, Lloyds Bank Commercial Banking, said: The national outlook continues to appear less positive again this month, although the improvements in the retail sector provides some reassurance of the continued resilience of the economy.
“Fluctuations in the regions are also continuing, and while overall confidence has weakened in most regions, it is worth noting that confidence has improved in the Midlands and Yorkshire & the Humber.”
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “While overall business confidence this month has remained broadly steady across the UK, optimism in the economy has fallen, and both remain significantly below the same period last year, and the historic average. This month we are also seeing firms’ concerns about leaving the EU intensify against the backdrop of ongoing economic uncertainty.”