Business confidence in Scotland dips slightly on previous month

Scotland is the only UK nation to record a lower reading for business confidence compared to January figures, it can be revealed.

Companies reported a lull in confidence in their own business prospects month-on-month, down three points at 42%, and their optimism in the economy went down two points to 28%.

The figures mean overall business confidence in the country fell by two points to 35% in February.

Meanwhile, overall UK business confidence is at a five-month high, rising five points from January’s reading of 39% to 44%, its highest level since September.

The figures come from the Business Barometer, which questions 1,200 businesses monthly to provide early signs about UK economic trends both regionally and nationwide.

This month’s survey covered responses between February 1 and 15, before the removal of various Covid restrictions across the UK’s nations.

A net balance of 31% of businesses in Scotland, however, are expected to increase staff levels over the next year, up seven points on last month, the figures showed.

Fraser Sime, regional director for Scotland at Lloyds Bank Commercial Banking, said despite the dip in confidence, Scottish businesses remain “firmly in positive territory”.

He said: “Many in the hospitality and leisure sector in particular will be happy about the next stage in the easing of restrictions, and looking forward to what will hopefully be a busy summer season.

“Of course some challenges do remain. Rising prices, coupled with ongoing supply chain issues, will be hampering many businesses, and we’ll be supporting companies as they overcome these headwinds and set their sights on growth.”

Across the UK, firms remained positive about their future trading prospects, with a four-point increase month-on-month to 45%, while optimism in the economy overall also increased by five points to 43%.

Overall business confidence in the the North East went up 17 points to 57%, the South West went up nine points to 46% and the West Midlands up eight points to 47%.

Only the North West (which remained unchanged at 44%) and Scotland did not have a higher confidence reading than last month.

The further easing of Covid restrictions in January had a positive impact across the sectors, the report said, with strong increases in manufacturing (up 11 points to 54%) and construction (up 18 points to 51%) with both reaching their highest level since the start of the pandemic.

Retail confidence also rose three points to 47%, another high since the start of Covid, while services remained unchanged at 38%.

The net balance of UK companies planning to create new jobs also increased by nine points to 38%.

Paul Gordon, of Lloyds Bank Commercial Banking, said: “The UK’s expected future growth is in positive territory following February’s rise in business confidence, trading prospects and economic optimism.

“Ten out of the 12 regions reported a growth in confidence, with a particularly pleasing rise in the North East which reversed its decline in January, indicating that businesses are looking forward with renewed optimism.

“The UK’s construction and manufacturing sectors have seen the biggest benefit as Covid restrictions and supply challenges ease, while the retail sector has also seen a boost in confidence.”

“What is clear is that business confidence is on an upward trajectory and we remain by the side of businesses as they look to grow.”