Tag: economic outlook

Scottish business confidence fell in May

Bank of Scotland’s Business Barometer for May 2023 shows: 

  • Business confidence in Scotland fell nine points during May to 22% 
  • Companies in Scotland reported lower confidence in their own business prospects month-on-month, down two points at 30% 
  • Overall UK business confidence remains strong at 28%, down five points on last month

Business confidence in Scotland fell nine points during May to 22%, 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 two points at 30%.  When taken alongside their optimism in the economy, down 20 points to 14%, this gives a headline confidence reading of 22%. 

Scottish businesses identified their top target areas for growth in the next six months as evolving their offer (45%), investing in their team (35%) and entering new markets (29%). 
 
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 three points on last month. 

Overall UK business confidence dropped five points to 28% in May. Despite the dip, every UK nation and region report a positive confidence reading. 

As the country celebrated the Coronation, London reported the highest levels of business confidence at 43% (down four points on last month), followed by the North East at 35% (down six points month-on-month). The West Midlands, South East and South West, also reported high readings in May, all at 30%.  

Firms remain optimistic about their own trading prospects, with a net balance of 34% expecting business activity to increase over the next 12 months, down just five points on last month.  

Chris Lawrie, area director for Scotland at Bank of Scotland Commercial Banking, said: “Despite a slight drop, business confidence figures remain positive and it’s great to see so many firms planning to invest in their teams.  

“On the ground we’re hearing that more and more companies are setting their sights on new goals in the coming twelve months.  Whether going after new markets, or making new hires to help during busier periods, it’s important that businesses ensure their working capital is in rude health.

“Having a keen eye on forecasting and finances can help firms to move swiftly when new opportunities arise. We’ll remain by the side of Scottish businesses to support them and help them to capitalise on growth opportunities this summer.”  

Confidence among manufacturers increased to a one-year high of 40% (up from 29%), while retail registered a more modest two point rise to 26%, and construction remained robust at 34% despite its monthly nine point decline.

Services confidence, however, fell back to 26% from 36%, almost erasing last month’s rise. Overall, confidence across the broad sectors remains above levels at the start of the year. 

Paul Gordon, Managing Director for Relationship Management, Lloyds Bank Business & Commercial Banking, said: “Although we’ve seen a slight slowdown in hiring activity this month, there is still an overall upward trend in hiring intentions this year, with improvements in labour availability as well.

“While businesses may be feeling less optimistic, it’s still encouraging to see confidence is still in line with the Barometer’s long-term average, consistent with positive growth. 

“Wage pressures continue to be at higher levels than before the pandemic, which management teams will be closely monitoring. And with inflationary pressures persisting, businesses need to remain agile to the changing economic environment, while keeping a tight watch on costs and the structure of their finances.” 

Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said:  “As the economic environment remains challenging, compounded by stubborn inflation and higher wage pressures, business confidence has dipped slightly this month as firms feel cautious about the wider economy and their own trading prospects. 

“However, while firms’ trading prospects and economic optimism both eased back, they still remain in positive territory as the UK has avoided an outright contraction in GDP – indicating a certain amount of underlying resilience in the economy.” 

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.”