Martyn Kendrick

While companies in Scotland reported lower confidence in their own business prospects month-on-month, down 12 points at 41%, their optimism in the economy rose 20 points to 41%.

Taken together, this gives a headline confidence reading of 41%, up from 37% in January.

A net balance of 45% of businesses in Scotland also expect to increase staff levels over the next year, up three points on last month.  

Looking ahead to the next six months, Scottish businesses identified their top target areas for growth as introducing new technology, such as AI, automation or digitalisation (51%), investing in their team, for example through training (35%) and entering new markets (32%).

The Business Barometer, which surveys 1,200 businesses monthly and which has been running since 2002, provides early signals about UK economic trends both regionally and nationwide.

Overall, UK business confidence was unchanged since January at 44%.

Firms’ confidence in their own trading prospects fell six points to 53%, but their optimism in the wider economy rose eight points to 36%.

London was the most confident UK nation or region in February (59%), followed by the North West (58%) and Northern Ireland (58%).

The construction sector saw particularly strong gains in overall confidence. In February, confidence was up 14 points to 60%, with manufacturing also seeing a boost, up five points to 37%.

Confidence for retail and service sector firms softened slightly, each down two and three points respectively.

Martyn Kendrick, Scotland director at Bank of Scotland Commercial Banking, said: “It’s encouraging to see business confidence in Scotland rise again in February.

“Scottish firms aren’t standing still – they’re embracing innovation and new technologies to support their growth plans over the months ahead. We’ll continue to be there to support their next steps.”

Hann-Ju Ho, senior economist at Lloyds Commercial Banking, said: “It’s encouraging to see optimism in the wider economy returning, although with a small reduction in firms’ confidence in their own trading prospects.

“The majority of the survey results were collected following the Bank of England’s close decision to hold interest rates at its February meeting, signalling potential easing ahead, which may have alleviated business concerns, including those around cost pressures, while the rise in pricing expectations to a six-month high may indicate firms are looking to rebuild their margins in 2026. 

“It’s also great to see confidence increase for manufacturers and construction firms as they are key for UK growth.” “

Amanda Murphy, CEO for Lloyds Business and Commercial Banking, added: “Business confidence holding steady at 44% is a sign of the resilience we’re seeing across the UK and it’s encouraging that firms are feeling more upbeat about the wider economic environment.

“Although businesses confidence in their own trading expectations eased slightly, many are preparing for growth, pointing to a more assured year ahead.

“It’s also positive to see more firms rebuilding their margins as price expectations ticked up in February. While some cost pressures remain, the fact that businesses plan to adjust prices responsibly shows a growing sense of confidence and a firmer footing for future investment.”