Business confidence rises in Scotland, but still lags behind rest of UK

Business confidence in Scotland has risen, but is still at the lowest level in the UK, new research has found.

Figures published by the Bank of Scotland indicated that overall confidence for Scots firms rose by 15 points in October to minus 3%.

However, it is in contrast to the overall confidence of companies across the UK, which rose by four points to stand at 6%.

The statistics were produced as part of the bank’s Business Barometer, which measures confidence after compiling responses from 1,200 businesses on a monthly basis.

Across Scotland, a net balance of 24% of businesses also 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.

Fraser Sime, regional director for Scotland at Bank of Scotland Commercial Banking, said the uncertainty gripping the UK was continuing to have an impact on business confidence.

“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,” said Mr Sime.

“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.”

Elsewhere, businesses in the West Midlands showed the most confidence in the UK at 16% – ahead of the South West at 15%, and the East Midlands (13%).

Canary Wharf
Paul Gordon, from Lloyds Bank, said the weakness in London in recent months was notable (Chris Radburn/PA)

Paul Gordon, managing director for SME and Mid Corporates at 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 at 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.”

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