Business confidence in Scotland bounced back by 15 points during October but remained the lowest in the UK at -3%, according to the latest Business Barometer from Bank of Scotland Commercial Banking.
Companies in Scotland report higher confidence in their business prospects at 2%, which rose seven points on last month. When taken alongside their views of the economy overall, this gives an overall confidence of -3%.
But businesses’ hiring intentions showed a net balance of 4% of businesses in the region expect to hire more staff during the next year, up 11 points on last month.
Across the UK, overall confidence rose four points to 6% as firms’ confidence in their own prospects climbed two points to 15%.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide. This month’s survey was conducted before the government announced its new deal on the UK’s departure from the EU.
Fraser Sime, regional director for Scotland at Bank of Scotland Commercial Banking, said: “It is encouraging to see that an increase in firms’ confidence in their own business prospects has underpinned a rise in overall Scottish business confidence this month, but it’s clear the uncertainty that’s gripped the UK for so long is still having an impact.
“Yet, with more firms telling us they intend to bring on new staff during the next year, we are optimistic growth will remain on the agenda. We’ve pledged to lend up to £1.6 billion to Scottish firms in 2019 and will be by their side as they maximise new opportunities.”
Across Scotland, a net balance of 24% 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 eight points on a month ago.
UK overview
Businesses in the West Midlands showed the most confidence, at 16%, ahead of the South West at 15%, and East Midlands (13%).
Those in Scotland were the least confident for the second month in a row, with an overall confidence of -3%, nine points below the national average.
Meanwhile, overall business confidence improved in all four broad sectors, with the largest increases being in the construction sector, which rose eight points to 18% and the manufacturing sector, which increased seven points to 5%.
Despite confidence in the services sector rising for the first time since June, by three points to 0%, overall confidence remained the weakest in this sector, while confidence in the retail sector saw a small increase of one point to 15%.
Paul Gordon, managing director for SME and Mid Corporates, Lloyds Bank Commercial Banking, said: “The national outlook has picked up slightly this month, with all regions other than Scotland reporting overall positive business confidence. However, the weakness in London in recent months is notable given that it was the strongest region a year ago. It is reassuring that the overall confidence improved in all four broad sectors, which may also have been supported by the general easing of company concerns about the UK leaving the EU.”
Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “Both business confidence and optimism about the wider economy have picked up this month, with economic optimism reaching a three month high as concerns about the impact of the UK leaving the EU eased. However, there was a slight step down in hiring intentions, which could reflect concerns about ongoing economic uncertainty.”