Tag: Business Barometer

Scottish business confidence falls but remains in positive territory

Bank of Scotland’s Business Barometer for December 2022 shows:  

  • Business confidence in Scotland fell nine points during December to 15%
  • Scottish businesses identify top growth opportunities as evolving their offer (36%), investing in their teams (31%) and entering new markets (25%)
  • Overall UK business confidence rose seven points during the last month to 17%, with eight out of 11 nations and regions reporting a higher reading than November


Business confidence in Scotland fell nine points during December to 15%, 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 five points at 25%.  When taken alongside their optimism in the economy, down 10 points to 6% this gives a headline confidence reading of 15%. 

Scottish businesses identified their top target areas for growth in the next six months as evolving their offer (36%), investing in their teams (31%) and entering new markets (25%).

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

A net balance of 11% of businesses in the region expect to increase staff levels over the next year, up three points on last month.

Overall UK business confidence rose seven points during December to 17%. The proportion of businesses that felt positive about the wider economy was up 10 points month-on-month to 8%, while their outlook on their own future trading prospects increased by two points to 27%. Businesses also remained optimistic about job creation, with 16% of firms planning to hire more staff in the next 12 months – up two points on November.

All UK regions and nations reported a positive confidence reading in December, for the first time since July, with eight out of 11 recording a month-on-month increase in confidence. Of those, the North West (up 31 points to 40%), North East (up 24 points to 34%) and South East (up 23 points to 14%) saw the largest monthly increases, with the North West now the most optimistic overall.

Chris Lawrie, area director for Scotland at Bank of Scotland Commercial Banking, said: “Although business confidence has dipped it’s encouraging to see it remain in positive territory, which is testament to the resilience of the business community here in Scotland.

“After a turbulent few months many companies are now looking at shoring up their investment plans for the year ahead. Those planning to invest in their teams and export into new markets will do well to keep a close eye on cash flow to ensure they’re ready to capitalise on opportunities as they arise.”

The manufacturing sector reversed a six-month trend of falling confidence, with a nine-point rise to 13%. Confidence in construction and services also increased by nine points to 29% and 18% respectively. However, retail confidence fell slightly, by two points to 13%.  

Paul Gordon, Managing Director for SME and Mid Corporates, Lloyds Bank Commercial Banking, said: “It’s encouraging to see the confidence of most regions and nations rallying as we end the year. This has been a tough time for businesses with rising costs and much uncertainty, but some firms are becoming more confident as we head in to 2023. 

“While wage expectations start to temper, prices continue to rise and keeping a close watch on cash flow remains a priority for businesses, no matter what industry you operate in. For those who are in need of support or are looking for advice, especially into the festive season and new year, at Lloyds Bank we are by your side in times of uncertainty.”

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Business confidence has received a boost in the run up to Christmas as firms anticipate a better festive trading period than last year.

“While firms report being hopeful for a more successful 2023, inflation and the risk of an economic downturn remain the biggest concerns for businesses, with rising costs evidenced by the number of firms expecting to raise prices.

“Wage growth is expected to remain high for now as retaining existing staff and attracting new talent will continue to be priorities for many businesses going into next year.”

Bank of Scotland – Christmas business barometer

A THIRD OF SCOTTISH BUSINESSES IN BETTER “ELF” THIS CHRISTMAS ! 

Bank of Scotland survey shows: 

  • 33% of businesses expect higher revenues this Christmas compared to last year 
    • 23% of businesses expect to see increased demand this seasonal period
    • Only one in ten (10%) of retailers say they are completely ready for Christmas trading
  • However, a fifth (20%) of firms said they do not feel fully prepared for the festive trading period 

Despite high inflation, rising energy prices and a tighter labour market, 33% of firms in Scotland expect this Christmas trading period to be merry and bright compared to last year, according to the latest insight from the Lloyds Bank Business Barometer.

Those predicting a bumper festive period cited having more time to prepare (25%), while increasing customer demand was cited by 22% of firms as they felt less affected by Covid restrictions due to the Omicron variant last year. Those expecting a worse Christmas trading period said they were struggling with increased costs of doing business (10%). 

Almost three-quarters of businesses surveyed said that Christmas was important for their future prospects (74%), but only one in ten (10%) said they felt completely prepared for Christmas. Meanwhile, a fifth (20%) said they are not yet fully prepared for the festive period. 

When asked what could help firms prepare more effectively, 30% said they wanted more support with rising costs, with 23% saying that better access to their supply networks would help. Skilled workers were also high on businesses’ wish lists, with 25% saying access to more skilled staff would boost Christmas trading.  

Chris Lawrie, area director for Bank of Scotland, said: “This year has been marked by highs and lows but it’s encouraging to see many firms are in good spirits about trade over the festive period.  

“With no restrictions in place, the opportunities for businesses are clear but we know that some aren’t fully prepared for this Christmas trading period.  It’s essential that businesses put plans in place now to carefully manage cashflow and make the most of what will be a busy end of the year.” 

Business confidence in Scotland is highest in the UK

Bank of Scotland Business Barometer for November 2022 shows:   

·       Business confidence in Scotland rose 19 points during November to 24% – the highest reading since July 2022 and highest of all UK nations and regions 

·       Scottish businesses identify top growth opportunities as investing in their teams (43%), evolving their offering (40%) and introducing new technology (35%) 

·       Overall UK business confidence remains robust at 10% with all regions and nations reporting a positive confidence reading apart from the South East 

Business confidence in Scotland rose 19 points in November to 24% – the highest reading since July 2022 and highest of all UK nations and regions, according to the latest Business Barometer from Bank of Scotland Commercial Banking.  

The survey was conducted between 1st-15th November, before the Chancellor’s Autumn Statement announcement on Thursday the 17th November. 

Companies in Scotland reported higher confidence in their own business prospects month-on-month, up eight points to 30%.  When taken alongside their optimism in the economy, up 30 points to 16% this gives a headline confidence reading of 24%.  

Scottish businesses identified their top target areas for growth in the next six months as investing in their teams (43%), evolving their offering (40%), and introducing new technology (35%).   
 
The Business Barometer, which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide. 
 
A net balance of 8% of Scottish businesses expect to increase staff levels over the next year, down eight points on last month. 
 
Overall UK business confidence fell five points during November, but remained positive at 10%. Firms’ outlook on their future trading prospects was down two points to 25%, and their optimism in the wider economy dropped four points to -2%. Despite a seven-point dip, UK businesses remained positive about hiring intentions with 14% of firms aiming to create new jobs in the next 12 months. 

All UK regions and nations, apart from the South East, reported a positive confidence reading in November, with seven recording a month-on-month increase in confidence. Of those recording an increase in confidence, Scotland, Wales (up 12 points to 17%) and the South West (up nine points to 5%) saw the largest monthly changes. 

Chris Lawrie, area director for Bank of Scotland, said: “It’s encouraging to see confidence among firms in Scotland reach the highest in the UK, as they show their trademark resilience in the face of numerous headwinds and a challenging economy. 

“As firms look to the year ahead, they’ll have a close eye on managing rising prices, and keeping a close eye on working capital will help firms as they try to mitigate the effects of inflation on their operations. We’ll be by their side to ensure they are in the best position possible in the months ahead and they look to capitalise on opportunities for growth.” 

Business confidence in retail increased to 15% (up from 9%), perhaps reflecting a renewed confidence in trading prospects ahead of the festive season. However, business confidence in the manufacturing sector fell for the sixth month in a row, to 4%, down 9 points, the lowest confidence level since early 2021. 

The construction sector held gains made in October, remaining unchanged at 20%, although this level still remains weaker than in the first half of the year. 

Paul Gordon, Managing Director for SME and Mid Corporates, Lloyds Bank Business & Commercial Banking, said: “The fall in confidence shows just how tough it is for businesses right now. 

“Pressures from rising costs continue and businesses are starting to feel the burden of higher energy bills. However, the tentative easing of wage expectations should provide some solace although we know the labour market is still tight. 

“We would encourage businesses to keep a keen eye on their costs and cash flow as we head into the festive period. If any businesses are struggling, we would encourage them to reach out for support. At Lloyds Bank we remain by the side of businesses to help navigate these challenging times.” 

Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said: “Given the recent political and economic landscape, it comes as little surprise that economic optimism and business confidence have fallen this month.

“Pay growth expectations remain high by historical standards, which could signal ongoing difficulties ahead for businesses to fill vacancies.

“Looking ahead, it will be interesting to see if the clearer policy picture provided by the Autumn Statement will lead to business confidence moving in a more positive direction as we go into 2023.” 

Bank of Scotland Business Barometer: Dip in Scottish business confidence

Bank of Scotland’s Business Barometer for October 2022 shows:  

  • Business confidence in Scotland fell 10 points during the last month to 5%
  • Country’s businesses identify top growth opportunities as evolving their offering (33%), investing in their teams (29%) and entering new markets (27%)
  • Overall UK business confidence fell one point during the last month to 15%, with five out of 11 nations and regions reporting a higher reading than September

Business confidence in Scotland fell 10 points during October to 5%, according to the latest Business Barometer from Bank of Scotland Commercial Banking – conducted between 3rd-17th October.

Companies in Scotland reported lower confidence in their own business prospects month-on-month, down 11 points at 22%.  When taken alongside their optimism in the economy, down 10 points to -14%, this gives a headline confidence reading of 5%. 

Scottish businesses identified their top target areas for growth in the next six months as evolving their offering (33%), investing in their teams (29%) and entering new markets (27%).

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

A net balance of 16% of Scottish businesses expect to reduce staff levels over the next year, down two points on last month.

Overall UK business confidence fell one point during October to 15%, in line with the average over the last three months. Firms’ outlook on their future trading prospects was up two points to 27%, and a net balance of 21% are planning to create new jobs, up four points on last month. However, businesses optimism in the wider economy dropped three points to 2%.

Five UK regions and nations recorded a month-on-month increase in optimism in October. Of those, London (up 16 points to 49%), the North West (up 14 points to 28%) and Wales (up nine points to 5%) saw the largest monthly increases, with London remaining the most optimistic region overall.

Chris Lawrie, area director for Scotland at Bank of Scotland, said: “Ongoing economic challenges, not least the cost of doing business, is hitting firms and we’re seeing this reflected in a less optimistic outlook.

“As we approach the busiest trading period of the year for many, businesses across the country need to prioritise maintaining a steady cashflow to remain resilient and be well-equipped for any opportunities to grow.

“After all, Christmas can be a frenetic and expensive time for businesses and their customers, so firms need to have a plan in place to manage this, as well as having some money aside to cover unexpected costs.

“We’ll remain by the side of Scottish businesses to help them continue to navigate the challenging market conditions and push for growth.”  

Business confidence in the manufacturing sector fell for the fifth month in a row, to 13%, down 1 percentage point, the lowest confidence level since February 2021.

Confidence in the retail sector declined by 6 percentage points to 9%, while confidence in the services sector also fell to 16%, both the lowest levels since early 2021.

However, the construction sector saw a 10 percentage point rise to 20%, although this level still remains weaker than in the first half of the year.

Paul Gordon, Managing Director for SME and Mid Corporates, Lloyds Bank Commercial Banking, said: “While confidence has marginally decreased this month, this also comes at a time of great economic uncertainty. The fact that it has only fallen by 1% suggests that businesses are showing resilience.

“As we head into the winter months and price pressures continue, energy price increases will start to bite and we are seeing continued pressure on pay expectations.

“Businesses need to keep a watchful eye on costs to ensure they are in the best possible position to face any future headwinds. For businesses that may be struggling, we encourage them to reach out to their networks for support. At Lloyds Bank we remain by the side of businesses to help navigate these challenging times.”  

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “While business confidence has marginally fallen this month, along with a drop in forward looking economic optimism, it is encouraging to see businesses still looking to increase their headcounts.

“However, cost pressures remain evident as businesses raise prices to protect their margins and wage pressure continue to be impactful. Given the recent turbulence in financial markets, it will be interesting to see how this will affect business confidence.”

Scotttish business confidence dips in August but remains in positive territory 

Bank of Scotland’s Business Barometer for August 2022 shows:   

·       Business confidence in Scotland fell 11 points during August to 5% 

·       Country’s firms identify top growth opportunities as diversifying into new markets (30%), evolving their offering (30%) and investing in their teams (27%) 

·       Overall UK business confidence fell nine points during the last month to 16%, its lowest level since March 2021, with only three out of 11 nations and regions recording a higher reading than July 

Business confidence in Scotland fell 11 points during August to 5%, according to the latest Business Barometer from Bank of Scotland Commercial Banking.   

Companies across the country reported lower confidence in their own business prospects month-on-month, down 29 points at 3%.  When taken alongside their optimism in the economy, down 5 points to -6%, this gives a headline confidence reading of 5%.  

Scottish businesses identified their top target areas for growth in the next six months as diversifying into new markets (30%), evolving their offering (30%) and investing in their teams (27%). 

The Business Barometer, which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide. 
 
A net balance of 10% of businesses in the region expect to increase staff levels over the next year, up 5 points on last month. 
 
Overall UK business confidence fell nine points during August to 16%, its lowest level since March 2021. Firms’ outlook on their future trading prospects was down 32 points to 5%, and their optimism in the wider economy dropped six points to 6%. The net balance of businesses planning to create new jobs also decreased five points to 16%. 
 
While every UK region and nation reported a positive confidence reading in August (except the South East, where confidence dropped 15 points to 0%), only three recorded a month-on-month increase in optimism. The three regions were the North West (up 26 points to 44%), South West (up 12 points to 23%) and Yorkshire (up nine points to 23%), with the North West now the most optimistic region overall. 

Fraser Sime, regional director for Scotland at Bank of Scotland Commercial Banking, said: “Ongoing pressures around rising costs are clearly continuing to impact Scottish businesses but, despite this month’s dip, that confidence remains in positive territory is evidence of firms’ resilience.  
 
“At times like these, businesses need to keep a close eye on cash flow to help mitigate turbulence in the months ahead. It’s encouraging to see businesses continuing to target new growth opportunities, with nearly a third planning to diversify into new markets. 
 
“We’ll remain by the side of Scottish firms to help them successfully navigate the challenging period ahead.”  

Business confidence declined across all four sectors in August. Confidence within the retail sector declined the most this month (13%, down 18 points), with the service sector also seeing a significant nine-point decrease (15%). Other sectors saw moderate decreases, with manufacturing down by four points (16%) and construction (26%, a fall of two points), in line with recent trends. 

Paul Gordon, Managing Director for SME and Mid Corporates, Lloyds Bank Commercial Banking, said:  “With inflationary pressures growing, businesses will no doubt be looking to their supply networks along with tight control of costs and profit margins where they can.  

“We know that rising costs are already dealing a heavy blow to businesses, but remaining agile to the changing economic environment will be vital for businesses in the months ahead.

“Firms must keep a tight watch on costs and structure their finances wisely, so they are in the best position possible. Businesses should try to remain flexible, and use the capital and cashflow available to them.  At Lloyds we remain by the side of businesses to help deliver that support.”

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Business confidence declined for a third consecutive month as firms continue to face economic challenges in the period ahead and as inflation concerns intensify.

“Despite edging lower this month, the outlook for both wage and price pressures remains elevated. However, there are some brighter points as the demand for staff remains positive, and firms reported lower concerns about staffing issues and the pandemic.”  

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.”

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.”

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.”

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.”

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.”