Scottish business confidence lowest in the UK - Bank of Scotland report

Business confidence in Scotland is “heading in the right direction” but remains the lowest in the UK, a report out today suggests.

Business confidence in Scotland continues to be the lowest in the UK. Picture: Jeff J Mitchell

The latest Bank of Scotland Business Barometer shows that overall confidence of firms in Scotland rose two points in the past month to -35 per cent.

Firms’ confidence in their own business prospects improved month-on-month, registering -30 per cent this month versus -33 per cent in July.

The barometer questions 1,200 businesses across the UK monthly as part of a wider Lloyds study and provides early signals about UK economic trends both regionally and nationwide. About 100 of those firms are located in Scotland.

When asked about the impact that Covid was having on their business, the majority of firms continued to see demand negatively affected during August. Some 65 per cent experienced a fall in demand for their products and services, up one percentage point on the month before.

More than a third (35 per cent) of Scottish firms surveyed said they were not currently using the Chancellor’s Job Retention Scheme.

Of the 57 per cent of businesses reporting disruption to their supply chain during August, 27 per cent expect the situation to improve within three months, while 7 per cent believe that it will take more than 12 months to return to normal levels.

Overall UK confidence rose eight points during August to -14 per cent. The south-east of England became the first region to register a positive reading since March, after confidence climbed from -31 per cent in July to 1 per cent this month.

After Scotland, the south-west of England was the least confident area in August, with a reading of -25 per cent.

Fraser Sime, regional director for Scotland at Bank of Scotland commercial banking, said: “August marks the second consecutive month where we’ve seen a slight improvement in overall business confidence.

“However, Scottish firms remain more pessimistic than their counterparts across the English regions and Wales – largely a reflection of the fact that Scotland is behind the rest of the UK in its emergence from lockdown.

“That said, the introduction of the Eat Out To Help Out scheme alongside VAT cuts this month will have provided a boost to those in the hospitality and leisure sectors. As we edge closer to phase four of lockdown, the trading prospects of all Scottish businesses should improve.”

Hann-Ju Ho, senior economist, Lloyds Bank commercial banking, added: “With business confidence sitting well below the long-term average, and official data for Q2 confirming the UK re-entered recession, the shape of any economic recovery remains highly uncertain.

“Nevertheless, it is encouraging to see gradual improvements in trading prospects.”

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