Scottish businesses remain positive about the country’s economic growth prospects, but confidence is lower than in any other UK nation or region, according to new findings from the Bank of Scotland Business Barometer.
Almost two-thirds (62%) are confident Scotland will see economic growth over the next three years, with 22% feeling very confident. This is the lowest confidence level in the UK, compared with 75% in Wales, the next-lowest nation or region, and a UK average of 82%.
Almost a third (31%) agree Scotland’s growth will outperform the UK economy over the next 12 months, while 41% disagree. This places Scotland third-lowest on expectations of outperforming the UK economy, ahead of the South West and East Midlands (both 28%).
Among Scottish firms confident about growth, the leading anticipated driver is investment in digital infrastructure (52%), followed by investment in communities such as town centre regeneration and housing (36%) and access to finance and investment capital (36%).
Two-thirds (66%) of Scottish firms feel Scotland receives its fair share of public investment, the fourth highest to agree in the UK, while a quarter (25%) of businesses surveyed say they have already witnessed notable growth in the country over the previous three years.
Among Scottish firms that have experienced growth over the past three years, 37% point to a local planning regime supportive of business development and growth. Investment in digital infrastructure and investment in apprenticeship schemes are the next most-cited factors, both at 34%.
However, one in five (21%) Scottish firms believe the economy has declined over the last three years, joint-highest in the UK alongside Yorkshire and above the UK average of 13%.
The Bank of Scotland Business Barometer survey is made up of 1,200 UK firms from across all nations, regions and sectors.
Martyn Kendrick, Scotland director at Bank of Scotland Commercial Banking, said: “While almost two thirds of Scottish firms remain confident about the country’s economic growth prospects, the findings show there is work to do to strengthen that confidence. Businesses are particularly clear about the role digital infrastructure, investment in communities and access to finance can play in boosting confidence over the next three years.
“Scotland also performs relatively well on perceptions of public investment, with two-thirds of firms believing the country receives its fair share. Translating that investment into visible, broad-based economic growth will be important in strengthening business confidence.”
The national picture
UK businesses are optimistic about their region’s economic growth prospects over the next three years despite a North-South divide around public investment, according to new research from Lloyds.
More than four-in-five (82%) are confident their region will see economic growth, with more than a quarter (27%) feeling very confident. The most confident regions are the North East (90%) and the North West (88%).
More than two-in-five (43%) agree their region’s growth will outperform the national economy over the next 12 months, while a third (33%) disagreed. A total of 62% of respondents in London said the capital will outperform the UK economy, more than twice as many as those in South West and East Midlands (both 28%).
Nearly two-in-three (64%) feel that their region receives its fair share of public investment, rising to 85% of businesses based in London, 81% in the South East and 66% in Scotland. However, fewer than two-in-five (37%) firms in Yorkshire say the same, with Wales at 38% and the North East at 49%.
Nationally, a third (33%) of businesses surveyed say they’ve already witnessed notable growth in their region over the previous three years, rising to 42% in the North West and 40% in London. By contrast, one in five (21%) firms in Yorkshire and Scotland report a decline in their economies over the last three years.
Businesses attributed the main reason for past regional growth to investment in transport infrastructure (34%), followed by R&D investment and backing for regional universities (33%) and investment in communities (32%).
Meanwhile, the primary drivers of business confidence are local planning systems that support business development and growth (37%); followed by investment in community infrastructure, such as housing or town centre regeneration, or investment in transport infrastructure – both at 36%.
Amanda Murphy, CEO for Lloyds Business and Commercial Banking, said: “Britain’s business leaders are bullish about their region’s economic prospects, particularly in those areas with strong devolved administrations. They are clear that investment in infrastructure, a supportive planning regime and backing for regional skills are key to the success of their local economies.
“However, it is necessary to rebalance perceptions around public investment allocations, which vary significantly between London and the rest of the country, to increase business confidence and unlock growth. At Lloyds, we will continue to work across the nations and regions, backing businesses, civic leaders and local communities with the finance needed to create jobs, growth and prosperity.”