Tag: forecasts

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.”

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.”