Scottish firms less confident than others in UK as soaring costs take toll

The latest business barometer from Bank of Scotland/Lloyds shows confidence north of the Border rising four points during August to 36 per cent. Overall UK business confidence increased to its highest level since February last year, jumping ten points to 41 per cent in August.

Companies in Scotland reported higher confidence in their own business prospects month-on-month, up 12 points at 53 per cent. When taken alongside their optimism in the economy, down two points to 19 per cent, this gives the headline confidence reading of 36 per cent. Scottish businesses identified their top target areas for growth in the next six months as evolving their offer, investing in their team and entering new markets. The barometer study, which polls some 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.

Chris Lawrie, area director for Scotland at Bank of Scotland, said: “It’s great to see confidence amongst Scottish firms climb this month and to see so many looking at avenues for growth. Businesses that invest now in new opportunities will stand themselves in good stead for the years to come. However, there are challenges, particularly with continued high prices which many firms are finding difficult to navigate. This makes it the perfect time for businesses to review their working capital.”

UK-wide, the construction, retail and service sectors all saw a rise in business confidence in August. Services gained 12 points to reach a 22-month high of 42 per cent, while retail firms were up nine points to 44 per cent - an 18-month high. Manufacturing confidence fell for a second consecutive month with a four-point decline to 30 per cent.

Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said: “Our analysis shows that businesses felt relief that interest rates may be reaching their peak, alongside hopes that measures to tackle inflation are having an impact. From the data, large firms and manufacturers are experiencing some degree of caution, which is likely to reflect the wider global economic environment and, for manufacturing, the rotation of spending towards services.”