Business confidence in Scotland rose 13 points during October to 49%, 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 13 points at 63%. When taken alongside their optimism in the economy, up 14 points to 35%, this gives a headline confidence reading of 49% (vs. 36% in September 2026).
Scottish firms' optimism in the economy was driven by stronger customer or market demand (49%), improving interest rates or financial conditions (31%) and a more stable political or global environment (29%).
A net balance of 47% of businesses in the country expect to increase staff levels over the next year, up one point on last month.
Business confidence in Scotland now sits above the 12-month average of 46%, with its highest figure this year of 55% in August.
Looking ahead to the next six months, Scottish businesses identified their top target areas for growth as investing in their team, for example through training (42%), entering new markets (39%) and investing in sustainability (39%).
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: “It's encouraging to see that confidence rose among Scottish businesses, particularly as firms appear positive about the opportunities ahead.
“What stands out is that this optimism is translating into plans for growth, with hiring intentions suggesting businesses are feeling confident about investing in their future. While challenges remain, the focus on developing talent and exploring new opportunities suggests firms are taking a longer-term view, putting themselves in a position to grow as conditions improve.”
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Overall, UK business confidence rose six points to 47% in October, sitting above the long-term average of 30%.
The rise follows September’s reading of 41%. October has also seen an improvement in firms’ own trading outlook and economic optimism, despite continued uncertainty from the Middle East conflict.
Optimism in the wider economy rose nine points to 40%, compared to a 12-month average of 37%. The drivers that led to the increase included stronger customer demand, better economic news, and improving financial conditions.
Businesses’ own trading outlook increased five points to 55%, compared to a 12-month average of 56%. Nearly two thirds of firms (63%, up six points from September) expect an increase in activity over the year ahead, while those expecting a decrease in activity rose by one point to 8%. Among firms expecting stronger activity, the main drivers were stronger customer demand, increased investment in technology and improved supply chain conditions.
Fiamma Morton, Managing Director, SME Banking at Lloyds, said: “I hear from business owners every day about their determination to keep moving forward. There are still challenges, but increasingly the conversation is about what comes next: where new customers will come from, how technology can make the business better, and where investing today might create an opportunity tomorrow.
“There are careful choices to make. Cost pressures haven’t gone away, so investment needs to work hard. But the ambition is absolutely there. Businesses are continuing to find ways to grow, adapt and make their next move.”