Scottish business confidence weakest in UK - Bank of Scotland report

Confidence levels among Scottish businesses have nudged higher in recent weeks but remain the lowest across the UK nations, a survey today suggests.

Scotland would appear to be trailing other parts of the UK despite a slight upturn in confidence levels. Picture: Jeff J Mitchell/Getty Images

The Bank of Scotland’s latest Business Barometer found companies reporting the same level of confidence in their own prospects month-on-month at minus 33 per cent.

When taken alongside their views of the economy overall, it gives a reading of minus 37 per cent for July, a slight rise of four points from minus 41 per cent in June.

Confidence increased eight points to minus 22 per cent at a UK level during July. The north-east of England was the most confident region at minus 3 per cent. Wales and Scotland were the least confident with minus 31 per cent and minus 37 per cent respectively.

Fraser Sime, regional director for Scotland at Bank of Scotland commercial banking, said: “While marginal, the slight increase in confidence we’ve seen this month is a step in the right direction. There’s still a long way to go for confidence to fully recover, but the current transition to phase three of lockdown should hopefully continue to boost many firms’ trading prospects.

“Pessimism is waning in many English regions as the hospitality and leisure sectors open their doors once again. With many firms beginning to restart operations here in Scotland this month, August will be telling as to whether the same confidence-inducing effect will take hold here too.”

The majority of Scottish firms continued to be negatively affected by coronavirus during July.

Almost two-thirds – 64 per cent – experienced a fall in demand for their products and services, up six points on the month before. But 9 per cent experienced an increase in demand, up four points on June.

With the job retention scheme beginning to wind down from August, 41 per cent of Scottish firms surveyed said they have no workers furloughed.

Of the 55 per cent of businesses reporting disruption to their supply chain during July, 18 per cent expect the situation to improve within three months. Only 2 per cent expect it will take more than 12 months to return to normal levels.

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “While the results suggest the economy is starting to see some improvement, economic confidence still remains in deep negative territory.

“The government announcement of the slight easing of social distancing measures has now enabled over half of businesses to reach their capacity and resume their usual activities.

“However, how businesses will continue to respond to the job retention scheme will be key in the coming months.”

The Lloyds/Bank of Scotland survey was conducted with 1,200 companies across the UK, including 100 in Scotland, between 1 and 15 July.

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