Tag: Bank of Scotland

Business leaders seek tax, trade and skills support to meet the challenge of the next twenty years

Almost half (47%) of UK businesses said taking on new staff is their key ambition in the medium-term, according to new research to mark the 20th anniversary of Bank of Scotland Business Barometer.

The survey asked 600 businesses about the major challenges and opportunities faced in the last two decades and anticipated challenges up to 2040 and beyond.

Companies also highlighted developing new products and services (36%) and increasing online sales (30%) as major ambitions and priorities.

The survey found that businesses expect online purchasing (20%) and demand for instant products and services (18%) to be the biggest changes in consumer behaviour in the next 20 years, forcing them to be more creative and innovative in order to adapt to deliver quickly.

These predictions mirror the factors which businesses cited as having had the biggest impact on their operations in the past 20 years – chiefly greater access to information (24%) and more online purchasing (22%) changing customer behaviour. 

However, firms are optimistic about further changes to consumer behaviour, with 38% reporting that advances in technology have had the biggest positive impact on their business in the past 20 years.

Challenges ahead

Despite a clear drive towards growth, a net balance of 83% of firms anticipate the next 20 years will be more challenging than the past two decades – which included the financial crisis and resulting credit crunch, recession, the Brexit referendum and the global pandemic.

Some of the challenges that businesses see themselves facing can be linked back to the pandemic, including rising costs (23%) and the ability to recruit staff (11%). In addition, one in ten (11%) businesses see the need to keep up with technological developments as their biggest challenge in the next two to three years.

Government provision of greater access to more vocational-based learning was seen by 44% of firms as being a way to help mitigate these challenges. However, companies believe that future growth opportunities will need to be supported by more favourable taxation to encourage sustainable business practices (52%) and new trade agreements with major trading partners (48%).

Paul Gordon, Managing Director for SME and Mid Corporates, Lloyds Bank Commercial Banking, said: “The Business Barometer has provided unique insights into the views of British businesses for 20 years. 

“In that time, we have seen a seismic shift in the economic context in the UK, as well as the extraordinary ability of business leaders to adapt and evolve to meet changing market needs.

“Perhaps it is not unsurprising that, having faced a quite unprecedented period of late and enormous change over the last twenty years, the majority of business leaders feel the next twenty years will be more challenging. 

“To help them through this, businesses are looking for support on skills, finance, trade and taxation to navigate in this environment. One thing that is clear is that our businesses and business leaders are incredibly resourceful and resilient and are adept at facing into constant change.

“They tell us they are gearing up for growth and expect to increase headcount, enhancing their service offering or utilising new technologies. We’ll be by their side over the months and years ahead as they deliver on their ambitions.”

Carmichael lays green foundations with Lanark Road development

A Glasgow-based housing developer has broken ground on a new sustainable 25-flat development in Edinburgh, with support from Bank of Scotland.

Carmichael Homes has delivered 11 developments across Greater Glasgow over the past nine years, including sites in Finnieston and Bishopbriggs. Building on its success, the firm has recently started construction on a new 25-flat development made up of a range of one to four-bed flats on Lanark Road in Edinburgh.

The latest development in Edinburgh will feature a green roof to help the building retain water and aid local biodiversity, enhanced high performing glazing for added insulation, modern fans and an energy efficient boiler system, linked to solar panels.

To support the development, Carmichael Homes secured a seven-figure funding package via Bank of Scotland’s Clean Growth Finance Initiative (CGFI) which provides discounted lending to help firms invest in sustainable projects.

The construction of the new flats is expected to take 16 months, with completion expected by December 2022. The business currently has three live developments across Glasgow and Edinburgh and is expecting a further three projects to go live next year – all of which will be developed with a focus on sustainability.

Carmichael Homes is also supporting Scottish businesses during the development, using products from Wick-based Ashley Ann Kitchens, Aberdeen-based Stewart Milne and many more locally sourced companies. 

Scott Carmichael, managing director of Carmichael Homes, said: “At Carmichael Homes, we create high-quality properties that are sustainably built to help Scotland on its way to net zero.

“The support from Bank of Scotland has been a massive boost to our business. It has enabled us to equip each property with a host of eco-friendly features and ensure each flat has a low carbon footprint.

“The project will also mark a continuation in our expansion into Edinburgh. A recent report* found that people across Edinburgh are concerned with the current climate emergency and by building new homes with this in mind, we are continuing our commitment to provide sustainable homes across Scotland.”

Douglas Spowart, relationship director at Bank of Scotland, said: “Earlier this year it was reported that renewables met 97% of the country’s electricity demand in 2020.

“While this was a positive development on our path towards net zero, there’s still more that can be done. Businesses in sectors ranging from agriculture to construction can all play a considerable role in helping us decarbonise.

“Carmichael Homes’ new project in Edinburgh is a prime example of a Scottish business doing just that and we’re proud to be supporting them with this new sustainable project.

“With COP26 just around the corner, we’ll continue to support businesses like Carmichael Homes as they work to reduce Scotland’s carbon emissions and strengthen our ever-growing green credentials.”

Scottish Business confidence soars to highest levels in UK

Bank of Scotland’s Business Barometer for June 2021 shows:

  • Scottish business confidence leaps 27 points to 42% – the highest in the UK
  • Net balance of 18% of businesses in the country expect to increase staff levels over the next 12 months
  • UK business confidence remains steady at 33% with all regions and nations reporting a net positive reading for the third consecutive month

Business confidence in Scotland rose 27 points during June to 42%, according to the latest Business Barometer from Bank of Scotland Commercial Banking. This is the sharpest rise in overall confidence this year and means Scotland has the highest levels of optimism anywhere in the UK.

Companies in Scotland reported higher confidence in their own business prospects month-on-month, up 32 points at 42%.  When taken alongside their optimism in the economy, up 24 points to 43%, this gives a headline confidence reading of 42%.

The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.

When it comes to jobs, a net balance of 18% of Scottish businesses expect to increase staff levels over the next year, up ten points on last month and the third consecutive month the reading has increased.

Overall UK business confidence remained steady month-on-month at 33%. Firms reported a small increase in their business prospects, up two points to 30%, the highest reading since September 2020. Confidence in the economy dipped marginally by two points to 36%.

Across the UK all regions and nations reported positive confidence readings for the third consecutive month. Businesses in Scotland, London (up 17 points to 41%) and the East of England (up ten points to 36%) reported the highest increases in confidence.

While confidence remained positive, firms in eight regions reported a month-on-month drop. The biggest decreases were in Yorkshire and Humber (down 14 points to 30%), the West Midlands (down 12 points to 29%), the North West (down nine points to 29%) and East Midlands (down nine points to 31%).

Fraser Sime, regional director for Scotland at Bank of Scotland Commercial Banking, said: “Business confidence in Scotland rose again in June as firms across the country slowly but surely returned to normal trading. It also positive to see that more firms are now planning to hire new staff this year – another clear indicator that the country is on the path to recovery.

“Despite this, the well-trailed postponement to the easing of lockdown restrictions will have dampened spirits, especially for those in the country’s tourism and hospitality sector and is another sign that we are not out of the woods yet.

“We’ll continue to stand by Scottish business and support firms through the coming months as we look to build back better.”

Differences in confidence between the UK’s regions and nations narrowed this month (chart 5). There were sizeable increases in Scotland (up 27 points to 42%), London (up 17 points to 41%) and the East of England (up 10 points to 36%).

Along with the South West (36%), these were the most confident parts of the country. The largest falls, albeit from previously elevated levels, happened in Yorkshire and the Humber (down 14 points to 30%) and the East Midlands (down 9 points to 31%). There were smaller declines in the South East (down 6 points to 31%), Wales (down 6 points to 31%) and Northern Ireland (down 6 points to 11%).

The majority of responses were given before the various UK governments formally announced the delay to the removal of all limits on social contact, which was originally expected to happen on 21st June in England and close to that date in other parts of the UK.

However, it is likely that anticipation of the delay may have had a small negative impact in confidence particularly in the retail sector (down eight points to 36%) while manufacturing also fell (down 18 points to 35%).

Despite this, confidence remains at historically high levels across the broad industry sectors – in part due to services increasing by five points (31%) to its highest level in more than three years and construction remaining steady at 35%.

Paul Gordon, Managing Director for SME and Mid Corporates, Lloyds Bank Commercial Banking, said: “Despite a fall in business confidence in eight of the UK’s nations and regions from the highs of last month, the differences are narrowing.

“It’s pleasing to see such significant improvements in a number of regions, in particular Scotland and London, with both reporting strong increases in confidence. We can be optimistic that the increase in confidence in the services sector, as well as the overall historically high levels across the broad industry sectors, bodes well for businesses as we remain by their side on their road to recovery.”

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “A fifth consecutive monthly increase in trading prospects and employment expectations highlights the resilience of UK businesses as they continue to recover from the challenges presented by the pandemic.

“Although we must now wait slightly longer for the last remaining COVID-19 restrictions to ease, it’s an encouraging sign that firms continue to have strong overall confidence in the outlook for the UK economy, as well as their expectations for their own growth prospects.”

New Digital Academy set to boost 10,000 small Scottish businesses

Bank of Scotland has launched a new digital academy to help people, businesses and charities across Scotland boost their essential skills.

The academy launches today (16th June) and includes live training sessions as well as videos, interactive webpages and guides that can be accessed on demand at any time, all for free. It is also committed to helping more than 10,000 Scottish businesses with their digital skills.

The online lessons are available to everyone, and will build a wide range of skills, from improving confidence online to developing a website for your business, managing your money and staying connected with friends and family. The academy also provides access to online events for small businesses and charities to network virtually and hear from expert speakers.

Bank of Scotland’s latest research revealed that 67% of people said they would improve their digital skills if they knew support was available.

The new data also found that almost two-thirds (63%) of people across Scotland are spending more time online. People are not only spending more time online but are also doing more online. For those who have tried new things for the first time during lockdown, more than nine in ten (94%) expect this to continue in the long-term and almost a fifth (17%) are concerned that their digital skills still aren’t good enough.

More than half (53%) of Scots rely on the internet for day-to-day life and 49% agreed being online helped them to find and get a job.

Philip Grant, chair of Lloyds Banking Group’s Scottish Executive Committee, said: “During the pandemic, digital skills have been a lifeline for many, helping people stay in touch with friends and access services like banking and online shopping. 

“Being online has become part of everyday life for many more people and creating the Bank of Scotland Academy is all about helping people build the right digital skills.

“For small businesses digital confidence and capability have been crucially important. In the last year, 44% of small Scottish businesses wouldn’t have continued trading without digital facilities.[1]

“Having the right digital skills means that people can stay connected with loved ones, businesses can run more efficiently, and charities can raise more funds by reaching more people.

“The lessons are open to everyone, easy to follow and completely free, so my message is: get involved.”

Kate Forbes MSP, Cabinet Secretary for Finance and the Economy, added: “Digital technology plays a key role in a great many aspects of our lives and is essential to our economic recovery. As many people also choose the convenience of digital banking services, industry led initiatives such as the Bank of Scotland Academy will ensure that our financial system remains inclusive and accessible.

“If people have access to devices and the skills and confidence to use them, it will have significant benefits in economic growth and ensuring services work for us all. I would encourage anyone who thinks they would benefit to make use of this excellent new resource.”

The live lessons and resources have been created by Bank of Scotland with the help of expert learning and technology partners. The number of lessons available will evolve over time to reflect changing needs.

Sessions can be booked through Eventbrite[2] and more bespoke sessions will also be available, built around the specific needs and objectives of organisations.

*Statistics taken from the Consumer Digital Index 2021.

Scottish business confidence enters positive territory for first time since the pandemic began

Bank of Scotland’s Business Barometer for April 2021 shows:

  • Scottish business confidence rose 11 points to 9% in April, the first net-positive reading since February 2020
  • But firms are still expecting to reduce staffing levels over the coming months
  • Overall UK business confidence at highest level since September 2018 as lockdown restrictions lift in England and firms in Scotland and Wales begin to reopen

Business confidence in Scotland rose 11 points during April to 9%, the first positive reading since February 2020, according to the latest Business Barometer from Bank of Scotland Commercial Banking.

Companies in Scotland reported higher confidence in their own business prospects month-on-month, up 10 points at 5%.  When taken alongside their optimism in the economy, up 11 points to 13%, this gives a headline confidence reading of 9%.

The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.

When it comes to jobs, a net balance of 9% of firms expect to reduce staff levels in the next year, down from 20% last month.

Overall UK business confidence surged 14 points in April to 29%, the highest reading since September 2018. The result follows the reopening of outdoor hospitality venues and non-essential retail and personal services providers in England and comes ahead of further restrictions easing in Wales and Scotland. Firms’ confidence in their own business prospects rose by 14 points to 26% and their optimism in the economy increased by 15 points to 32%.

Most UK regions and nations reported a month-on-month increase in confidence during April, with firms in the South West (up 22 points to 30%), London (up 20 points to 32%), the East Midlands (up 20 points to 40%) and Yorkshire and the Humber (up 20 points to 32%) reporting the largest surges.

No nation or region reported a fall in confidence, and nowhere had a net-negative confidence reading for the first time since July 2019.

Fraser Sime, regional director for Scotland at Bank of Scotland Commercial Banking, said: “With hospitality and retail reopening this month, firms are feeling more optimistic as they begin to welcome people back to shop, eat and enjoy what Scotland has to offer.

“While some businesses are still planning to reduce staffing levels this year, it’s encouraging to see the number of companies planning job cuts has decreased month-on-month, a trend we hope to see continue. As lockdown restrictions ease over the coming weeks, we will continue to stand by Scottish businesses as they look to their recovery.”

Confidence increased in all sectors, with manufacturing and retail confidence levels at three-year highs. Manufacturing stood out as the most positive sector (40%), likely reflecting strong global demand and notwithstanding ongoing supply chain issues. Retail confidence jumped to 39%, while construction confidence also increased to 28%. Services confidence rose to 25%, which was also the highest it has been since 2018.

Paul Gordon, Managing Director for SME and Mid Corporates, Lloyds Bank Commercial Banking, said: “It’s very encouraging to report a continued improvement in sentiment for the UK’s regions and nations, particularly the Northern English regions that are leading the upward trend.

“In the sectors, the story is broadly positive – especially manufacturing and retail, which stood out and reported confidence levels at three-year highs. The retail sector, specifically, experienced some much-needed relief this month with the easing of lockdown restrictions.

“We hope that pent-up consumer demand will drive growth as the economy reopens further.”

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “A third consecutive monthly rise in business confidence alongside the highest level of confidence for two-and-a-half years tells us a positive story about the UK’s continued economic recovery and leaves us optimistic about the road ahead.

“While uncertainties remain regarding the evolution of the pandemic, this month’s improvement in sentiment reflects a further easing of COVID-19 restrictions, while progress in vaccine deployment is raising hopes that the negative impact of the health crisis will continue to fall in the months ahead as the economy reopens.”

Borders-based Agricultural Society gears up to re-open

A Kelso-based agricultural society is ready to re-open this year after overcoming the challenges of the past twelve months, thanks to support from Bank of Scotland.

The Border Union Agricultural Society (BUAS), formed in 1813, would typically hold four major events a year but saw them all cancelled thanks to the pandemic.

The Championship Dog Show qualifier for Crufts, the Border Union Agricultural Show in July and the BUAS’ annual Kelso Ram Sales, the biggest of its type in Europe, and the Borders Countryside Education day for all primary 5s in the Scottish Borders, were all cancelled in 2020.

The Society’s income was also hit by the cancellation of weddings, events and seminars that were frequently held in its main hall and the showground.

The BUAS received support from Bank of Scotland with a £210k Coronavirus Business Interruption Scheme loan.

The funding has helped the business to pay ongoing business costs not covered by government support schemes and cancellation costs for events.

Now, the Society has become the site of an NHS vaccination clinic to support vaccination efforts in the Borders, and is hoping to hold some of their events this year.

Verity Mutch, administrator at the Border Union Agricultural Society, said: “After the first lockdown last March we saw all of our main events and hall hires for the year cancelled. This was extremely difficult for the Society as we missed out on our main sources of revenue for the entire year.

“Thankfully Bank of Scotland have been very supportive. We’ve been working with them since 1964 and knew they’d be on hand to help us through this difficult time.

“Over the coming months we are hoping to hold some of our events again – albeit in a scaled back capacity. While we took the difficult decision to cancel our agricultural show in January, we hope to hold our ram sales again in September and potentially our dog show in October.”

Julie McLaren, relationship manager at Bank of Scotland, said: “Despite the cancellation of its major annual events, BUAS has worked hard to keep operations running and is now in a position to welcome both members and visitors back once restrictions allow.

“At Bank of Scotland, we’ve supported the business through this challenging period and look forward to seeing the events back on our calendar as soon as possible.

“As with BUAS, we will remain by the side of business in Scotland as we support firms through the remaining months of the pandemic.”

Scottish business confidence returns to pre-pandemic levels – but remains in negative territory

Bank of Scotland’s Business Barometer for March 2021 shows:

  • Overall confidence of firms in Scotland rose 15 points in the past month to -2%
  • Optimism grew in all UK nations and regions for a second consecutive month after roadmap for ending lockdown restrictions was laid out
  • Overall UK business confidence surged to its highest level since February 2020

Business confidence in Scotland rose 15 points during March to -2%, the highest reading since March 2020, according to the latest Business Barometer from Bank of Scotland Commercial Banking.

The data has been released just a week after the one-year anniversary of the first COVID-19 lockdown.

Companies reported higher confidence in their own business prospects month-on-month, up 6 points at -5%.  When taken alongside their optimism in the economy, which was up 24 points to 2%, the increases give a headline confidence reading of -2%. Despite the increase, Scotland was the only area of the UK to give a net pessimistic reading during March.

The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.

When it comes to jobs, a net balance of 20% of firms in Scotland expect to reduce staff levels over the next year, up 16 points on last month.

The UK picture

Overall UK business confidence rose for a second consecutive month in March. Firms’ confidence increased by 13 points to 15%, the highest reading since February 2020, before coronavirus was confirmed as a pandemic by the World Health Organisation. 

UK firms’ economic optimism also increased by 15 points to 17%, while confidence in their own business prospects jumped 10 points to 12%.

In fact, every UK region and nation reported an increase in overall confidence during March, with most reporting a double-digit rise month-on-month. The North East (1% to 26%), West Midlands (3% to 27%) and East of England (-8% to 12%) reported the largest increases.

Fraser Sime, regional director for Bank of Scotland Commercial Banking, said: “Scottish business confidence has increased for a second consecutive month and is the highest since March 2020. Despite it remaining in negative territory, there is hope that the end of a challenging year is now in sight. 

“We’ll remain by the side of businesses in Scotland as restrictions are eased in the coming weeks and months, helping them on the road to recovery and as they seek new growth opportunities.”

Paul Gordon, Managing Director for SME and Mid Corporates, Lloyds Bank Commercial Banking, said: “We have completed a full circle since lockdown began in March 2020 and it is uplifting to see businesses portraying confidence for the months ahead. The regions have reported a tremendous result in confidence, especially England which is positive across the board.

“In the sectors, the uptick in confidence for manufacturing is driven by strong trading prospects, while in retail, there is an anticipation that pent-up demand will drive consumption when restrictions are lifted. The months ahead will play a pivotal role in charting the course for the UK’s recovery and we remain by the side of businesses as they go along on this journey.”

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “It’s been a year since the first lockdown and the surge in confidence this month tells us firms are increasingly confident about economic recovery.

“The broadly positive outlook is driven by steady vaccine deployment, the roadmap out of lockdown and the extension of government support measures. It will be interesting to see whether the momentum for stronger business optimism is sustained in the months ahead.”

Garden centre rooting for reopening

New Hopetoun Gardens, a garden centre in Broxburn, was among many retailers who were forced to suddenly close their doors when the pandemic hit in March last year.

The garden centre, which offers Scotland’s largest range of plants for sale, relied heavily on customer visits and face-to-face trading so the forced closure hit the business hard. With an average of 10,000 customers a month during a normal April and May, it missed out on the busiest trading months of the year.

Profits dropped considerably and 28 of its 36 staff were furloughed.

In April 2020, New Hopetoun Gardens approached Bank of Scotland for support and received a £195,000 Coronavirus Business Interruption Loan Scheme (CBILS) funding package. This allowed the business to ensure it had sufficient cashflow, pay suppliers, care for the plants, and provide reassurance to its staff that operations will continue once restrictions have eased.

New Hopetoun Gardens introduced home delivery services for its customers and launched a new website six weeks ago to facilitate a click and collect service.

These measures have helped over the past few months but the decision after Christmas to give ‘non-essential’ status to the centre has hampered business prospects of opening before its busiest trading period in early spring. 

Morag Macrae, joint owner of New Hopetoun Gardens, said: “The past year has been really challenging for us as a business. Most of our trading is done face-to-face and while we’re incredibly grateful to our fantastic customers who have used our click and collect and delivery service, we saw our revenue drop considerably.

“The change that saw us considered as a “non-essential” shop was quite a blow as we hoped to be open to take full benefit of our busy spring trading period.

“Thankfully, the support from Bank of Scotland has been a massive boost. It has allowed us to keep our operations running and keep us out of our overdraft which has been a huge relief.

“While times are still challenging, business has picked up considerably in March and we’re hoping we will be able to re-open soon to make the most out of our key trading period, when it is safe to do so.”

Confidence drops in Scotland as lockdown restrictions continue

Bank of Scotland’s Business Barometer for January 2021 shows:

  • Overall confidence of firms in Scotland fell 23 points in the past month to -32%
  • 52% of firms are confident the Covid-19 vaccination roll-out will boost trading prospects in 2021
  • Optimism falls in seven of 11 UK regions and nations as firms deal with latest lockdown restrictions

Business confidence in Scotland fell 23 points during January to -32%, according to the latest Business Barometer from Bank of Scotland Commercial Banking.

Companies in Scotland reported lower confidence in their own business prospects month-on-month, down 20 points to -27%.  When taken alongside their views of the economy, down 25 points to -37%, this gives a headline confidence reading of -32%.

The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.

The majority (65%) of firms said current Covid-19 restrictions had caused a fall in turnover but they expected the effects of the vaccine programme to boost trading prospects for 2021, with 52% saying the rollout had made them feel more confident about the year ahead. However, only 11% expect trading levels to return to pre-pandemic levels in the next twelve months.

When it comes to jobs, a net balance of 28% of businesses in Scotland expect to reduce staff levels over the next year, down five points on last month.

At UK level, overall business confidence dipped in January as the latest lockdown restrictions came into force, falling by three points to -7%. Firms’ economic optimism dropped dramatically month-on-month, decreasing by 34 points to -10%.

Almost all UK nations and regions saw a month-on-month dip in confidence during January, with the biggest falls after Scotland (-32% vs -9% in December) being reported in Wales (-20% vs -1% in December) and the South West (-8% vs 5% in December).

However, firms reported a month-on-month increase in confidence in London (up five percentage points to 3%), the South East (up seven percentage points to -4%) and North West (up eight percentage points to -5%). Yorkshire business confidence remained steady month-on-month at -4%.

Fraser Sime, regional director for Scotland at Bank of Scotland Commercial Banking, said: “This latest drop in confidence has appeared against a backdrop of tighter restrictions being reintroduced in Scotland. However, despite this dip, fewer firms report they are planning on making redundancies in the year ahead, the second consecutive month this has fallen.

“We know Scottish businesses have been resilient since the pandemic began and the vaccination roll-out is boosting firms’ optimism about the coming months. We’ll be by the side of businesses to help them navigate both the short-term challenges and long-term opportunities ahead.” 

In the industry sectors confidence remained above pre-vaccine levels (chart 4). While some sectors reported declines, manufacturing slipped by nine points to 9%, services fell by four points to -9% and retail by five points to 6%. Confidence levels in the construction sector improved for a second month, rising four points to -1%.

Paul Gordon, Managing Director for SME and Mid Corporates, Lloyds Bank Commercial Banking, said: “It has not been an easy start to 2021, but nonetheless businesses continue to persevere and remain resilient in the face of uncertainty and change – the construction sector’s confidence improving for a second month and more broadly, industry and the majority of the regional confidence sitting above pre-vaccine levels.

“While the road ahead will be challenging, we hope the news of the vaccine rollout progress will positively impact regional and sector confidence in the coming months.”

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “It has been a challenging start to the New Year for UK businesses adapting to a third national lockdown alongside the new EU trade arrangement taking effect.

“Nevertheless, while confidence remains below average, it is encouraging that business sentiment is still the second highest since the low of May 2020. Overall, the vaccine rollout programme has lifted confidence and that will hopefully buoy business optimism in the coming months.”

Scottish business confidence sees sharp rise after vaccine rollout – but remains negative

Bank of Scotland’s Business Barometer for December 2020 shows:

  • Overall confidence of firms in Scotland rose 29 points in the past month to -9%
  • Companies in three of 12 UK nations and regions return to net optimistic position for the first time since March
  • Report shows biggest month-on-month improvement in UK business confidence in four years after vaccine rollout begins

Business confidence in Scotland increased to its highest point since the pandemic began in March, rising 29 points month-on-month to -9% during December, according to the latest Business Barometer from Bank of Scotland Commercial Banking.

Scottish firms’ optimism towards the economy increased by 38 points month-on-month to -12%, while confidence in their own business prospects rose 20 points to -7%.  Together, this gives a headline confidence reading of -9%.

Businesses’ hiring intentions showed that a net balance of 33% of businesses in Scotland expect to reduce staff levels over the next year, down 10 points on last month.

The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.

Across the UK, overall confidence saw its largest monthly increase for more than four years in December, following vaccine progression announcements. Confidence climbed by seventeen points to -4% in November to -4%. Economic optimism jumped 23 points to -5%, while firms’ confidence about their trading prospects increased 11 points to -3%.

All 12 UK nations and regions saw a rise in overall confidence during December. The most marked improvements were reported in Scotland (up twenty-nine points to -9%); the South West (up twenty-two points to 5%) and the West Midlands (up twenty-two points to 4%). The North East, South West and West Midlands all moved into net positive territory for the first time since March this year.

The South West recorded highest confidence at 5%, followed by the West Midlands and South West, each at 4%. The North West had the lowest confidence during December at -13%, despite confidence increasing month-on-month by 15 points.

Fraser Sime, regional director for Scotland at Bank of Scotland Commercial Banking, said: “To see an increase in the confidence of Scottish businesses is a step in the right direction as we come to the end of what has been a very difficult year.

“The roll-out of the vaccine should buoy spirits further as it helps to bring light to a Covid-19 exit strategy, but this optimism could falter in coming months with continued uncertainty over lockdown restrictions.

“Whatever the new year brings, we’ll continue to be by the side of businesses across Scotland, as we all work together to support the country’s recovery from the pandemic.”

National overview

In the industry sectors, confidence reached the highest levels seen since the start of the pandemic. Manufacturing reported a strong rebound this month despite looming uncertainty during the survey period about the UK’s new trading arrangements with the EU, surging by twenty-five points, from -25% to 0%.

This was followed by a growth in confidence for construction, which rose by eighteen points to -5%; services, which jumped by sixteen points to -5% and the retail sector which reported an eleven point lift in confidence to -1%. Nevertheless, entering the holiday trading period, confidence in retail, as in other sectors, remains below the long-term average.

Paul Gordon, Managing Director for SME and Mid Corporates, Lloyds Bank Commercial Banking, said: “It has been encouraging to see a clean sweep of regional confidence increases this month.

“Despite the regional restrictions across the UK, it is promising to see regions beginning to report above-average confidence figures. While we can primarily attribute this uptick to the news of the vaccine progress, it has also injected a boost in confidence for the sectors, with manufacturing rebounding strongly and other sectors following suit.

“We know that confidence has been volatile in 2021, it is positive to see this sharp rise in confidence and we hope this continues through to the New Year.”

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “The news of the vaccine progress has bolstered this month’s confidence figures, more than offsetting uncertainties around the UK’s new trading relationship with the EU.

“While confidence remains below average and significant challenges lie ahead, it is heartening to conclude a challenging year with a notable improvement in business sentiment and with the positive momentum hopefully continuing into 2021.”

With Saturday’s latest setback, however, it’s clear that we’re far from out the woods yet. 2021 may prove to be every bit as challenging as 2020 has been for UK businesses – Ed.