Bank of Scotland: Scottish business confidence dips in February
Business confidence in Scotland fell two points during February to 35%, according to the latest Business Barometer from Bank of Scotland Commercial Banking.
Companies in Scotland reported lower confidence in their own business prospects month-on-month, down three points at 42%. When taken alongside their optimism in the economy, down two points to 28%, this gives a headline confidence reading of 35%.
The Business Barometer, which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide. This month’s survey captured responses between 1st and 15th February before the removal of various Covid restrictions across the UK’s nations.
A net balance of 31% of businesses in Scotland expect to increase staff levels over the next year, up seven points on last month.
Overall UK business confidence saw an uptick in February, rising five points from January’s reading of 39% to 44% – its highest level since last September. 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%. The net balance of businesses planning to create new jobs rose by nine points to 38%.
Every UK nation and region maintained a positive overall confidence reading in February. The North East (up 17 points to 57%), South West (up nine points to 46%) and West Midlands (up eight points to 47%) saw the biggest increases month-on-month, with the North East reporting the highest levels of business confidence overall. Along with Scotland, only the North West (which remained unchanged at 44%) did not have a higher confidence reading than last month.
Fraser Sime, regional director for Scotland at Lloyds Bank Commercial Banking, said: “Despite a slight dip, Scottish business confidence remains firmly in positive territory, and is another sign that firms are welcoming the return to business as usual.
“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
“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.”
The further easing of Covid restrictions in January had a positive impact across the sectors 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 rose three points to 47%, another high since the start of Covid. Services remained unchanged at 38%.
Paul Gordon, managing director for SME and mid corporates, Lloyds Bank Commercial Banking, commented: “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.”
Hann-Ju Ho, senior economist Lloyds Bank Commercial Banking, said: “It’s extremely encouraging to see a such an improvement in business confidence reaching its highest level since September, fuelled by trading prospects reaching their highest level since the start of pandemic.
“With hiring intentions also reaching their highest level since the end of the furlough scheme there is hope that the easing of supply bottlenecks will alleviate a number of challenges that businesses have been facing and help underpin the UK’s growth in 2022.”