Business confidence in Scotland has experienced a notable decline, dropping 13 points in November to reach a reading of 31%, according to the latest Business Barometer from Bank of Scotland. This figure marks a decrease from the 44% recorded in October. The survey, which gathers insights from 1,200 businesses monthly, indicates that Scottish firms have reported a reduction in their confidence regarding their own business prospects, which fell by two points to 43%.
In addition to lower confidence in personal business ventures, optimism regarding the broader economy has also suffered, plummeting 25 points to just 18%. These combined figures paint a concerning picture of the current business climate in Scotland, illustrating the challenges companies are facing.
Despite the dip in confidence, Scottish businesses are looking ahead and identifying key areas for future growth. The report highlighted several priorities: 57% of respondents expressed intentions to invest in their teams through training; 41% plan to evolve their offerings by introducing new products or services; and 28% recognised the necessity of integrating new technology, including AI and automation, into their business models.
Martyn Kendrick, Scotland director at Bank of Scotland Commercial Banking, commented on the findings, stating, “While business confidence has fallen this month, Scottish firms are identifying fresh avenues for growth – whether that’s by investing in new technology, or developing new skills.” He further remarked on the role of the bank in supporting businesses to achieve their ambitions and to prepare for future seasonal demand.
On a national scale, the overall UK business confidence has dipped slightly to 41%, down from 44% in October. However, this figure remains above the long-term average of 29%. Specifically, while firms' confidence in their own trading prospects experienced a slight increase to a net balance of 55%, their views on the economic climate have weakened, falling nine points to 26%.
London emerged as the most confident region in the UK during November, boasting a confidence level of 57%, followed by the West Midlands at 51%.
Hann-Ju Ho, a senior economist at Lloyds Commercial Banking, observed that November’s overall confidence metric reflects a downward trend, marking the third consecutive month of decline, yet reassured that it is still above the long-term average. “These results suggest that while firms have mixed views about the economy, they see their businesses in a good place to cope with any challenges they might face,” he noted.
Sector-specific observations within the report revealed improvements in several key industries. The manufacturing sector reported its first rise in trading prospects in four months, with a net balance increase of three points to 49%. The construction and services industries also reported improved outlooks, with net balances reaching 56% (up six points) and 61% (up four points), respectively. Conversely, the retail sector continued to face challenges, indicating softer prospects for a second consecutive month, with a net balance decrease of six points to 45%.
Reflecting on the overall landscape, Paul Kempster, managing director for relationship management at Lloyds Banking & Commercial, expressed optimism, stating, “It’s clear that businesses are feeling confident in themselves, evidenced by their buoyant trading prospects, which is great news for the UK.” He acknowledged the improvements in the manufacturing sector and its potential role in driving economic growth. Despite some regional declines, Kempster emphasised the resilience exhibited by various sectors and reiterated the commitment to support businesses across the country.
Source: Noah Wire Services