Scottish business confidence drops to lowest in UK – report
Business confidence in Scotland has plummeted by 20 points in one month amid global changes and “domestic uncertainty”, according to a new report.
The latest business barometer from Bank of Scotland Commercial Banking rated firms’ confidence at -9% in December, down from 11% in November.
It makes Scotland the least confident part of the UK, coming in 26 points below the UK average, the barometer noted.
Meanwhile, a net balance of 25% of companies north of the border are saying they are more pessimistic about the economy than they were three months ago, the study found.
In comparison, firms were evenly split last month, with as many businesses feeling optimistic as pessimistic.
Furthermore, a net balance of 7% said they expect their companies to boost business activity next year, down from 22% in November.
Despite this, firms’ hiring intentions turned into positive territory, rising by three points compared with November.
Fraser Sime, director of SME (small and medium-sized enterprises) banking at the bank, said: “Confidence among businesses across Scotland has fallen, which is understandable given changes globally and domestic uncertainty.
“But despite the dip in confidence, a growing number of firms now plan to hire more staff in 2019, showing that businesses are still prepared to invest in growth, albeit with a degree of caution.
“With greater clarity expected in the next quarter and beyond, we will hopefully see an increase in confidence levels as firms begin to operate in a more stable environment.”
UK-wide, overall confidence fell seven points to 17% as firms’ optimism about the economy dropped 10 points to 7%.
Companies’ confidence in their own business prospects slipped five points to 26%.
A net balance of 34% of companies said they felt the UK’s exit from the European Union is having a negative impact on their expectations for business activity.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Tentative signs of a recovery in business confidence last month proved to be short-lived, as businesses end the year more concerned about their trading prospects and the wider economy.
“The expected slowdown in economic growth in Q4 could well be extended into early 2019, but there is potential for a rebound in sentiment should there be some respite in uncertainties that firms currently face.”
Some 1,200 companies, including 101 in Scotland, were surveyed between November 29 and December 14.
The overall “balance” of opinion weighs up the percentage of firms that are positive in outlook against those that are negative, with responses weighted to reflect the composition of the economy.