Over £2.5 billion of new finance can be available to businesses across Scotland in 2026, helping them grow, invest and create new jobs.
This forms part of Lloyds Banking Group’s plan to make over £35 billion of new finance available to companies operating and investing across the UK in 2026.
Businesses look to invest and grow in 2026
New research from Bank of Scotland’s Business Barometer reveals Scottish businesses identified their top target areas for growth as introducing new technology such as AI, automation or digitalisation (51%), investing in their team such as training (35%) and entering new markets (32%) in the next six months.
Martyn Kendrick, Scotland Director at Bank of Scotland Commercial Banking, said:“Bank of Scotland is proud to make £2.5 billion of new finance available to local firms in Scotland, helping them grow their businesses, invest in innovation and create new jobs.
“Whether it’s supporting a small company taking its first step into exporting, or a larger firm scaling up to meet growing demand, we’re committed to helping businesses turn their potential into growth.”
This comes as Lloyds and CBI convene business leaders, policymakers and experts from across the financial services sector in Scotland to explore how to drive sustainable growth under the UK’s Industrial Strategy.
Backing ambitious businesses across Scotland
Organisations across Scotland are already benefiting from Bank of Scotland’s support. Albyn Housing Society, one of the largest housing associations in the Highlands, has received a £10 million funding package.
The business has begun work on the first 125 homes as part of its mission to build 600 affordable homes over the next five years.
The development responds directly to Highland Council’s 2024 Housing Challenge, which calls for 24,000 new homes to be built across the region by the end of the decade.
Andrew Martin, Executive Director at Albyn Housing Society, said: “Albyn was established over 50 years ago to provide housing for workers at the Invergordon smelter.
“While the challenges have changed, our purpose hasn’t. We’re here to make sure people across the Highlands have access to good, affordable homes in the communities they live in.
“Our five-year plan is ambitious, and it reflects what local people have told us they need. Support from Bank of Scotland means we can start right away – putting plans into action and delivering the kinds of places people want to live.”
Business confidence in Scotland fell 15 points to 36% in December.
Firms’ optimism in their own trading prospects fell 24 points to 38%, while their optimism in the economy dipped seven points to 34%.
Overall UK business confidence rose five points in December to 47%
Business confidence in Scotland fell 15 points during December to 36%, according to the latest Business Barometer from Bank of Scotland.
Companies in Scotland reported lower confidence in their own business prospects month-on-month, down 24 points at 38%. When taken alongside their optimism in the economy, down seven points to 34%, this gives a headline confidence reading of 36% (vs. 51% in November).
Looking ahead to the next six months, Scottish businesses identified their top target areas for growth as investing in their team, for example through training (50%), introducing new technology, such as AI or automation (34), entering new markets (30%) and investing in sustainability (30%).
The Business Barometer, which surveys 1,200 businesses monthly and which has been running since 2002, provides early signals about UK economic trends both regionally and nationwide.
National picture
Overall, UK business confidence rose five points in December to 47%.
While firms’ confidence in their own trading prospects dropped one point to 52%, their optimism in the wider economy strengthened 11 points to 42%.
London and the West Midlands were the joint-most confident parts of the UK in December (both 63%) followed by the East Midlands (56%).
Sector Insights
Construction saw the sharpest improvement, up 22 points to 61%, its highest level seen this year. Manufacturing also was up five points to 49%, while retail firms edged higher to 47%, likely reflecting seasonal demand. Services confidence fell one percentage point to 41%.
Martyn Kendrick, regional director for Scotland at Bank of Scotland said: “Scotland’s businesses continue to showcase real resilience, and are setting out plans for growth in the new year ahead.
“We’ll be right alongside them – up and down the country, so that they can make the most of new opportunities as they arise.”
Hann-Ju Ho, Senior Economist, Lloyds Commercial Banking, said: “It is great to see business confidence ending the year on a higher note, up ten points from the start of the year.
“The uplift in business confidence is driven by an 11 point increase in optimism in the wider economy, increasing to a four month high.
“Confidence changed most in the construction sector which saw a big boost in December, to the highest level this year.”
Paul Kempster, Managing Director for Commercial Banking Coverage, Lloyds Business & Commercial said:“To end the year stronger than where we started will be a boost for businesses as they gear up for the growth opportunities that they hope lie ahead in 2026.
“As we approach the peak sales period for retailers, it’s great to see their confidence rise as well as the considerable gains seen in construction.
“For all businesses regardless of sector, maximising cashflows, investment and a keen eye on margins will stand them in good stead as we head into 2026.”
Business confidence in Scotland rose three points during August to 59%, according to the latest Business Barometer from Bank of Scotland.
Companies in Scotland reported slightly lower confidence in their own business prospects month-on-month, down five points at 65%. However, when taken alongside their optimism in the economy, up nine points to 52%, this gives a headline confidence reading of 59% (vs. 56% in July).
A net balance of 70% of businesses in the country also expect to increase staff levels over the next year, up 47 points on last month.
Looking ahead to the next six months, Scottish businesses identified their top target areas for growth as investing in their team, for example through training (59%), evolving their offer, for example by introducing new products or services (39%) and entering new markets (39%).
National picture
Overall, UK business confidence rose two points in August to 54%.
While firms’ confidence in the wider economy dropped three points to 44%, their optimism in their own trading prospects rose five points to 63%.
London was the most confident part of the UK in August (69%), followed by the East of England (64%).
Sector Insights
Manufacturing firms saw confidence up 14 points this month, to 62%. This level was previously seen in 2015. Retailers also saw an increase in confidence this month, with levels up 13 points to 57%, a five-month high. However, construction firms confidence fell by five points to 40%, a four-month low while confidence in service sector firms also fell eight points to 53%.
Martyn Kendrick, Scotland Director at Bank of Scotland Commercial Banking, said:“It’s encouraging to see Scottish business confidence continuing to strengthen, outpacing the UK average for a fourth month in a row.
“The strong focus on team investment and widespread hiring plans demonstrates that Scottish firms are taking a long-term view of growth, building the capabilities they need for sustained success. We’ll continue to provide our support to help businesses across the country achieve their ambitions.”
Hann-Ju Ho, Senior Economist, Lloyds Commercial Banking, said:“This continued upward trend in business confidence suggests UK firms remain optimistic about their own trading prospects while there is a modest cooling of confidence in the wider UK economy.
“Firms are focusing on what they can control, with many looking to pursue growth opportunities, including entering new markets and adopting new technologies.
“Wage expectations have seen a notable shift this month, but it remains to be seen whether this signals the start of a sustained trend or a temporary uplift, as they have been broadly stable in recent months.”
Paul Kempster, Managing Director for Commercial Banking Coverage, Lloyds Business & Commercial said: “August’s figures show a build on business confidence. Opportunities continue to lie ahead for businesses, whether that be upskilling their workforce or exploring new markets.
“While confidence isn’t rising evenly across all sectors and regions, it’s encouraging to see positive sentiment holding well above the long-term average.”
Business confidence in Scotland fell ten points during December to 31%
Companies in Scotland reported lower confidence in their own business prospects month-on-month, down seven points at 44%
Overall UK business confidence decreased seven points in December to 35% with firms’ outlook on the economy also down by eleven points
Business confidence in Scotland fell ten points during December to 31%, 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 seven points at 44%. When taken alongside their optimism in the economy, down 14 points to 18%, this gives a headline confidence reading of 31%.
Scottish businesses identified their top target areas for growth in the next six months as evolving their offer (39%), investing in their team (37%), and entering new markets (24%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 30% of businesses in Scotland expect to increase staff levels over the next year, up five points on last month.
National picture
Overall UK business confidence fell two points in December to 35%, the first decrease since August, driven largely by firms’ outlook on the overall UK economy which dipped by eleven points from 38% to 27%. Businesses’ optimism in their own trading prospects also decreased, but less markedly so – by five points to 43%.
Companies’ hiring intentions also dropped slightly with 29% of firms intending to increase staff levels over the next 12 months, down six points month-on-month.
Firms in West and East Midlands were the only regions to report an increase in confidence, up one point to 33% and up five points to 34% respectively. The North East was most confident, remaining at 48% for the second consecutive month, followed by the East of England (45%), London (38%) and the South West (36%).
Firms in the services industry reported a significant decrease in confidence, down 16 points to 30%, due to moderation in both trading prospects and economic optimism. Manufacturing confidence also eased back (38%, down seven points). However, retail and construction both bucked the trend with rises to 44% (up two points) and 37% (up two points) respectively.
Martyn Kendrick, regional director for Scotland at Bank of Scotland Commercial Banking, said: “While we’ve seen a dip in confidence from businesses in Scotland, we’re still seeing strong figures at 31%, just four points below the national average.
“With the festive season keeping many businesses busy, it’s encouraging to see them thinking positively about the year ahead with trading prospects one point higher than the UK average.
“For those planning to invest in their teams and evolve their offer, now is a perfect time to think about cash flow to ensure they enter the new year on steady footing, ready to capitalise on new upcoming opportunities. We’ll continue to be by the side of businesses throughout 2024 and beyond to help them prosper.”
Paul Gordon, managing director for SME and Mid Corporates at Lloyds Bank Commercial Banking, said: “After some strong performances in November, a number of sectors have declined this month including services and manufacturing.
“However, both are still higher and stronger than a year ago. Retail and construction firms are both marginally more confident this month and significantly more so than in December 2022.
“Despite the falling confidence figures for this month, we can be comforted that businesses have been resilient during a year of challenging economic conditions and continue to be positive about the future.
“However, as recent ONS GDP data has shown, the UK near-term economic outlook remains tough and that will no doubt have an impact on consumer and business behaviour alike.
“If businesses take time to look at their financial stability now to ensure cash-flow remains a priority, as well as planning ahead their staffing levels and requirements, that should put them in good stead to both manage headwinds and seize opportunities in 2024.”
Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “This December data was collected following several key announcements, including energy prices rises and the UK economic outlook being revised down in the Autumn Statement. All of this will undoubtedly have had an impact on business confidence as we head into 2024.
“Businesses are also balancing cost pressures with a challenging labour market that will see increases to minimum wage in April 2024, as perhaps indicated in the wage growth figures, at a time when they are managing staff retention and recruitment decisions.
“However, over the course of the year confidence has steadily increased from an average confidence of 25% in the first three-months of 2023 and ending the year with a three month average of 39% – an indication of the positive trajectory business has seen this year. This provides a healthier position to begin 2024 with, compared to 2023.”
SCOTTISH BUSINESSES REPORT RISE IN ECONOMIC OPTIMISTISM
Business confidence in Scotland fell three points during September to 33%, but remains above the year-to-date average of 30%
Firms’ optimism in the economy rose 10 points to 29% as Scottish businesses identified their top target areas for growth in the next six months as evolving their offer (40%), entering new markets (39%) and investing in their team (30%)
Overall UK business confidence dipped five points in September from 41% to 36%, with firms’ outlook on future trading prospects down marginally on last month’s reading of 46% to 41%
Business confidence in Scotland fell three points during September to 33%, but remains above the year-to-date average of 30%, 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 14 points at 39%. When taken alongside their optimism in the economy, up 10 points to 29%, this gives a headline confidence reading of 33%.
Scottish businesses identified their top target areas for growth in the next six months as evolving their offer (40%), entering new markets (39%) and investing in their team (30%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 31% of businesses in the region expect to increase staff levels over the next year, up seven points on last month.
National picture
Overall UK business confidence fell five points in September from 41% to 36%. Firms’ outlook on their own trading prospects remained strong at 41% despite a five-point drop on last month, and their optimism in the UK economy also remained robust at 30%, down by seven points on August’s reading.
Businesses hiring intentions remained upbeat with 26% of firms reporting plans to increase their staff levels over the next year, down five points on last month.
Companies in London reported the highest levels of business confidence for the second consecutive month at 44% (down eight points month-on-month). Firms in Yorkshire reported the second highest reading at 40% (up eight points month-on-month), followed by those in the North West at 38% (up four points month on month).
The fall in business confidence this month centred around the retail and services sectors, following strong sentiment in August. Retail confidence fell to 32% (down 12 points) dragged down in particular by trading prospects, while services confidence declined to 36% (down eight points). Construction confidence also fell to 36% (down eight points). However, manufacturing was stronger, with confidence rising to a three month high of 36% (up six points).
Chris Lawrie, regional director for Scotland at Bank of Scotland Commercial Banking, said: “Despite a small dip this month business confidence in Scotland remains positive, with many firms seeking opportunities to grow by expanding their teams and investing in new markets.
“As we move into the winter months, those operating in the hospitality, retail and leisure sectors should be planning carefully for any increase in Christmas trade and getting ready to capitalise on opportunities as they arise. We’ll remain firmly by the side of businesses to support their ambitions and offer the tailored funding needed to thrive.”
Paul Gordon, managing director for SME and Mid Corporates at Lloyds Bank Commercial Banking, said: “As part of the Barometer survey data, we asked firms what represents the biggest issue for the UK Economy. The overwhelming answer from businesses this month was a combination of inflation, interest rates and energy prices.
“With recent data from various organisations in August showing inflationary measures having their desired effect, including our own UK Sector Tracker which showed demand falling across most sectors, the coming months may see a more stable environment where prices are concerned.
“Energy prices, from the wholesale market, have decreased and while businesses are not eligible for the same consumer price cap, most businesses will have longer term agreements with energy suppliers that shelter them somewhat from short term volatility. However, as we move into winter, it would be prudent for businesses to review their utility contracts and see if there are savings to be made.”
Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said: “While the gains in business confidence we saw in August have not been maintained, it’s important to see the wider trend clearly reflected in the data which paints a very different picture to this time 12 months ago, when the economy was in significant difficulties.
“Despite some month-to-month movements, if you look at the year in quarterly time periods, confidence has steadily risen from 20% in the first quarter, 26% in the second and now an average of 27% in the third.
“Although the economic environment remains uncertain with inflation and interest rate pressures playing their part, the recent decision by the Bank of England to leave interest rates unchanged is likely to help businesses feel more upbeat about the future, which may underpin confidence in the last three months of the year.”
Business confidence in Scotland rose four points in August to 36%
Companies in Scotland reported higher confidence in their own business prospects month-on-month, up 12 points at 53%
In August, overall UK business confidence reached its highest level since February 2022, increasing 10 points on July’s reading to 41%
Business confidence in Scotland rose four points during August to 36%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in Scotland reported higher confidence in their own business prospects month-on-month, up 12 points at 53%. When taken alongside their optimism in the economy, down two points to 19%, this gives a headline confidence reading of 36%.
Scottish businesses identified their top target areas for growth in the next six months as evolving their offer (47%), investing in their team (39%) and entering new markets (31%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 24% of businesses in the region expect to increase staff levels over the next year, down five points on last month.
National picture
Overall UK business confidence increased to its highest level since February last year, jumping 10 points to 41% in August. All 11 regions and nations reported a positive business confidence reading in August, with nine regions and nations reporting a higher confidence reading month-on-month.
Optimism in the UK economy also increased in August by 16 points to 37%, and the number of businesses expecting an increase in their trading prospects rose by three points to 46%.
Businesses in London reported the highest levels of business confidence at 52% (up 20 points month-on-month), its strongest reading in 14 months. Firms in the South East reported the second highest reading at 47% (up 17 points month-on-month), followed by those in the South West at 46% (up 12 points month on month).
The construction, retail and service sectors all saw a rise in business confidence in August. Services gained 12 points to reach a 22-month high of 42%, while retail firms were up nine points to 44%, an 18-month high.
Construction firms’ confidence also increased by 11 points to a four-month high of 42%. In contrast, manufacturing confidence fell for a second consecutive month with a 4-point decline to 30%, taking it to the lowest level since April 2023.
Chris Lawrie, area director for Scotland at Bank of Scotland, said: “It’s great to see confidence amongst Scottish firms climb this month and to see so many looking at avenues for growth. Businesses that invest now in new opportunities will stand themselves in good stead for the years to come.
“However, there are challenges, particularly with continued high prices which many firms are finding difficult to navigate. This makes it the perfect time for businesses to review their working capital and ensure they have the money they need to invest in opportunities as they arise.
“We’ll reman by the side of Scottish firms, providing them with the tools and support they need.”
Paul Gordon, managing director for SME and Mid Corporates at Lloyds Bank Commercial Banking, said: “We’ve seen a strong rebound in confidence, now higher than at any time since the Russian invasion of Ukraine and well above the long-run average. Business optimism is helped by the outlook on peak interest rates and the direction of travel on inflation.
“However, this month we are seeing a clear difference in confidence levels between large and smaller firms. Larger firms are continuing to feel the headwinds of the overall macroeconomic climate, while smaller firms, which are more likely to trade locally, are benefiting from the counter-inflationary measures and relative economic stability.
“We are here to support businesses of all sizes and can offer expertise not just for those who trade in the UK, but internationally as well.
“Manufacturing confidence in the UK has fallen this month once again, reflecting the overall challenges for the sector in most major economies. Some manufacturing businesses continue to experience challenges with recruitment, resulting in upward pressure on wages. The Bank of England will need to consider carefully in its next decision for interest rates.”
Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said: “The bounce in economic optimism this month is the standout point. Our analysis shows that businesses felt relief that interest rates may be reaching their peak, alongside hopes that measures to tackle inflation are having an impact.
“With trading prospects remaining stable, and hiring and wage intentions also rising, the macro environment for small businesses and those outside the manufacturing sector is more upbeat.
“From the data, large firms and manufacturers are experiencing some degree of caution, which is likely to reflect the wider global economic environment and, for manufacturing, the rotation of spending towards services.”
Business confidence in Scotland fell 18 points during July to 32%
Scottish businesses identified their top target areas for growth in the next six months as evolving their offer (44%), investing in their team (38%) and entering new markets (33%).
Overall, UK business confidence dipped six points to 31%, with nine out of 11 regions and nations reporting a lower confidence level month-on-month
Business confidence in Scotland fell 18 points during July to 32%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in Scotland reported lower confidence in their own business prospects month-on-month, down 11 points at 41%. When taken alongside their optimism in the economy, down 27 points to 21%, this gives a headline confidence reading of 32%.
Scottish businesses identified their top target areas for growth in the next six months as evolving their offer (44%), investing in their team (38%) and entering new markets (33%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 29% of businesses in the region expect to increase staff levels over the next year, down 20 points on last month.
National picture
Overall, UK business confidence dipped by six points to 31% in July, with nine out of 11 regions and nations reporting a lower confidence reading month-on-month.
Optimism in the economy has also fallen, dropping 11 points to 21%, the lowest levels since February this year.
However, firms remained resilient in their own trading prospects, with 43% of companies expecting business activity to increase over the next 12 months, up one point on last month and reaching a 14-month high.
Despite the fall in overall confidence, levels remain higher than the survey’s long-term average reading of 28% and every UK region and nation reported a positive confidence reading in July.
The North East reported the highest levels of business confidence at 43% (down four points on last month), followed by Yorkshire (down seven points month-on-month) and the West Midlands (up two points month-on-month) both at 38%.
Retail was the only broad sector registering higher confidence (up six points to 35%), mostly reflecting stronger transport services.
The fall in overall business confidence this month was led by the service sector sentiment falling by seven points to 30%. While the fall in confidence was seen broadly across this sector, hospitality firms appeared to be more resilient.
Confidence also was lower in manufacturing (down 16 points to 34%) and construction (down eight points to 31%).
Chris Lawrie, area director for Scotland at Bank of Scotland Commercial Banking, said:“While business confidence may be down this month, it’s brilliant to see that it’s still in positive territory, proof of the resilience of Scottish businesses who are managing headwinds including persistent high inflation.
“Despite the ongoing challenges, those in the country’s hospitality and leisure industry will be reaping the rewards from the uplift in tourism this summer, and those around Edinburgh will be preparing for the Fringe Festival in the hope of a welcome boost in trade.
“With another bank holiday on the horizon, firms will need to manage their working capital closely to ensure they are ready for peaks in demand, and ready to take advantage of any opportunities that arise.”
Paul Gordon, managing director for SME and Mid Corporates at Lloyds Bank Commercial Banking, said: “It’s not surprising that the challenging economic environment is continuing to weigh heavily on businesses and reduce their overall confidence. However, the resilience in their trading prospects, pricing and wage expectations is more encouraging.
“Increased spending in the retail sector is clearly having a positive impact and as we look ahead into the second half of the year, I am sure that businesses will be starting to gear up for the months ahead and ultimately to the busy Christmas season.
“Managing costs, staffing and inventory during this time is crucial to savvy financial planning, and business should not hesitate to reach out for business support should they require it.”
Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said:“The Barometer presents a complex picture for firms this month, with the data showing that trading prospects remain strong with businesses feeling under less pressure by inflation to raise prices.
“However, there is clearly uncertainty about the wider economy and rising interest rates. This may be causing net hiring intentions to moderate slightly. Nevertheless, wages and jobs growth continue to support staff with the current cost of living.
“However, the sectoral analysis this month shows some positive signs for the retail sector, while there are indications that pent-up demand may be boosting confidence in tourism and travel. As businesses continue to adapt to the economic environment, we expect to see ongoing resilience broadly across all sectors.”
Business confidence in Scotland rose 28 points during June to 50%
Scottish businesses identified their top target areas for growth in the next six months as evolving their offer (41%), investing in their team, and entering new markets (both 34%)
Overall, UK business confidence rose nine points to 37%, with all regions reporting a positive confidence reading
Business confidence in Scotland rose 28 points during the beginning of June to 50%, 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 22 points at 52%. When taken alongside their optimism in the economy, up 34 points to 48%, this gives a headline confidence reading of 50%.
Scottish businesses identified their top target areas for growth in the next six months as evolving their offer (41%), investing in their team, and entering new markets (both 34%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 49% of businesses in the region expect to increase staff levels over the next year, up 20 points on last month.
National picture
Overall, UK business confidence increased by nine points to 37% in June, with all regions reporting a positive confidence reading. Eight out of 10 regions reported a higher confidence reading than in May.
The East Midlands reported the highest levels of business confidence at 52% (up 35 points on last month), the highest level of any UK region or nation this year.
Scotland reported the second highest confidence reading, followed by the North East at 47% (up 12 points month-on-month) and Yorkshire at 45% (up 26 points month-on-month). London and the South West were the only regions to report a decline in confidence. In London confidence fell by 10 points to 33%, while in the South West it fell by one point to 29%.
Business confidence for firms in the service sector rose to 37% (up 11 points), the highest seen since February 2022. With the recent spell of good weather and a reduction in food and energy prices, businesses in leisure and hospitality may be able reap the rewards in the months to come.
Manufacturing firms’ confidence also increased to its highest level since early 2022, rising to 50% (up 10 points) to outperform other sectors.
Chris Lawrie, area director for Scotland at Bank of Scotland Commercial Banking, said: “It’s great to see confidence among Scottish firms on the rise. Many businesses will be looking forward to a busy summer period, especially with large events like the Edinburgh Fringe on the horizon which will no doubt bring excellent trading opportunities for the hospitality and leisure industry.
“It’s encouraging to see leadership teams looking to evolve their offering and making plans to invest in their colleagues too. This should go hand in hand with carefully managed working capital to ensure that businesses have the financial headroom to go after the growth opportunities that come their way.”
Paul Gordon, managing director for SME and Mid Corporates at Lloyds Bank Commercial Banking, said: “The boost in confidence and hiring intentions is a welcome sign that businesses are managing well in what continues to be a challenging environment.
“It’s particularly pleasing to see that for both services and manufacturing, two sectors which have been hardest hit in recent years, there is real optimism for trading prospects and growth. However, wage pressures continue to be above pre-pandemic levels and firms need to be mindful of this and ensure that costs are evenly distributed and managed closely.”
Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said: “It’s encouraging to see business confidence rebounding following last month’s five-point dip to 28%. Trading prospects and optimism have seen a resurgence this month with overall confidence up in all but two of the twelve regions of the UK, which shows positive prospects across the wider economy.
“However, interest rate rises and cost pressures are still felt by many and we await to see the impact of the latest 50 basis point rise in the base rate. Meanwhile, expectations for average pay growth, although down slightly this month, appear to have picked up compared with the start of the year and remain elevated relative to pre-pandemic levels.”
Lloyds Bank’s Business Barometer for March 2023 shows:
Business confidence in Scotland rose 24 points during March to 38%
Companies in Scotland reported higher confidence in their own business prospects month-on-month, up 34 points at 41%
Overall UK business confidence in March reached its highest level since May last year, with eight out of 11 regions and nations reporting higher levels of confidence than February
Business confidence in Scotland rose 24 points during March to 38%, according to the latest Business Barometer from Bank of Scotland Commercial Banking – conducted between the 1st – 15th March ahead of the Chancellor’s Spring Budget on Wednesday 15th March.
Companies in Scotland reported higher confidence in their own business prospects month-on-month, up 34 points at 41%. When taken alongside their optimism in the economy, up 15 points to 35% this gives a headline confidence reading of 38%.
Scottish businesses identified their top target areas for growth in the next six months as evolving their offer (37%), entering new markets (35%) and investing in sustainability (30%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 33% of businesses in the region expect to increase staff levels over the next year, up 34 points on last month.
Overall UK business confidence climbed 11 points to 32% in March, with firms reporting their highest confidence levels since May last year.
On average, firms felt positive about their own trading prospects with 39% of firms expecting business activity to increase in the next 12 months, up eight points on last month and 25% said they would increase staff levels by this time next year, up five points month-on-month.
Every UK region and nation had a positive confidence reading in March, with eight out of 11 regions recording a month-on-month increase in confidence.
For the second month in a row the West Midlands reported the highest levels of business confidence at 48% (unchanged month-on-month), followed by Scotland (up 24 points), London (up 20 points), and the North East (up two points) all at 38%.
Chris Lawrie, area director for Scotland at Lloyds Bank Commercial Banking, said:“Scottish businesses are feeling confident about the months ahead and It’s great to see firms’ optimism in the overall economy is at its highest level since May 2022.
“With the winter months behind us, firms will likely be preparing for the brighter – and often busier – summer period. Businesses that keep a close eye on cash flow and manage their working capital will be best placed to capitalise on opportunities. We’ll continue to be by the side of Scottish businesses to help steer them through what we hope will be a strong spring and summer season.”
There was a broad rise in business confidence across the sectors, particularly in construction (47% up 28 points) and manufacturing (37% up ten points) both at a ten-month high and retail (32% up 11 points) the highest since February 2022.
Paul Gordon, Managing Director for Relationship Management, Lloyds Bank Business & Commercial Banking, said: “It’s great to see economic optimism as well as trading prospects at a ten-month high.
“We can see from the data that this could well be down to a combination of a less obstructive hiring environment and the longer-term wage pressures trending downwards.
“As we look ahead, growth and investment must be the watch words for businesses across all sectors. This will help build future resilience against an uncertain economic landscape.”
Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said: “Business confidence has seen a surge this month with economic optimism and trading prospects bolstering firms.
“With hiring intentions improving, we may see employment growth picking up in the coming months. Tentative signs of easing wage pressures suggest that businesses’ difficulties in finding staff may have started to ease.
“Although the measures in the Budget were widely trailed, it is yet to be seen what the full impact of the Chancellor’s announcement, along with the surprise rise in inflation and recent increase in interest rates, will have had on business confidence.”
Business confidence in Scotland rose four points during February to 14%
Scottish businesses identified their top target areas for growth in the next six months as hiring new employees (43%), introducing new technology (31%) and evolving their offer (30%)
Overall, UK business confidence remained positive in February at 21% and 31% of firms reported feeling positive about their own trading prospects for the year ahead
Business confidence in Scotland rose four points during February to 14%, 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 one point at 7%. When taken alongside their optimism in the economy, up eight points to 20%, this gives a headline confidence reading of 14%.
Scottish businesses identified their top target areas for growth in the next six months as investing in their team (43%), introducing new technology (31%) and evolving their offer (30%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 1% of businesses in the region expect to reduce staff levels over the next year, down 15 points from January when a net balance of 14% of businesses planned to create new jobs.
Overall UK business confidence decreased by just one point to 21% in February. Firms remained positive about their own trading prospects with a net balance of 31% expecting business activity to increase in the coming 12 months.
Firms also reported plans to create new jobs with 20% of businesses intending to make new hires over the next 12 months – up three points from January.
All UK regions and nations reported a positive confidence reading in February, with six areas reporting a month-on-month increase in confidence. Of those, the West Midlands (up 30 points to 48%) and Yorkshire and Humber (up 22 points to 34%) saw the largest monthly increases.
Chris Lawrie, area director for Scotland at Lloyds Bank Commercial Banking, said:“After a dip in confidence in January, it is good to see that businesses are once again feeling optimistic about their own trading prospects and the wider economy.
“However, rising costs, supply chain challenges and skills shortages are still affecting several key sectors across the country. As firms grapple with these challenges it’s easy for attention to pull away from seizing opportunities for growth.
“Firms that keep a close eye on cash flow and manage their working capital will be best placed to take on any unforeseen challenges and go after prospects in the months ahead.”
Retail confidence bounced back, rising for the first time in three months to 21% (up 14 points), led by improvements in both trading prospects and economic optimism. However, business confidence fell in construction (down eight points to 19%) and services (down five points to 20%) although this remains higher than in the latter part of 2022.
Scotland only: Paul Gordon, Managing Director for SME and Mid Corporates, Lloyds Bank Commercial Banking, said: “While overall confidence has dipped slightly, it’s encouraging to see businesses backing their own trading prospects. This may well be down to the easing of cost pressures as we see the prices of commodities such as oil and energy coming down. At the same time, with pay expectations easing, this may be giving businesses the boost they need to weather the rest of the year.”
“As we move further into 2023, focusing on growth and investment should be key for businesses across the sectors, while ensuring that margins and cash flow are also prioritised.”
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Business confidence has lost a little momentum this month, following the strong gains seen recently. Firms are feeling more cautious about the wider economy. However, confidence in their own trading prospects continues to strengthen, helped by tentative signs that wage and other cost pressures may be reducing.
“While inflation appears to be tapering, pressures on consumers will need to ease further to help make it a more stable environment for businesses to operate.”
