Martyn Kendrick – Regional director for Scotland at Bank of Scotland

Companies in Scotland reported lower confidence in their own business prospects month-on-month, down 24 points at 38%. When taken alongside their optimism in the economy, down seven points to 34%, this gives a headline confidence reading of 36% (vs. 51% in November).

Looking ahead to the next six months, Scottish businesses identified their top target areas for growth as investing in their team, for example through training (50%), introducing new technology, such as AI or automation (34), entering new markets (30%) and investing in sustainability (30%).

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 rose five points in December to 47%.

While firms’ confidence in their own trading prospects dropped one point to 52%, their optimism in the wider economy strengthened 11 points to 42%.

London and the West Midlands were the joint-most confident parts of the UK in December (both 63%) followed by the East Midlands (56%).

Construction saw the sharpest improvement, up 22 points to 61%, its highest level seen this year. Manufacturing also was up five points to 49%, while retail firms edged higher to 47%, likely reflecting seasonal demand. Services confidence fell one percentage point to 41%.

Martyn Kendrick, regional director for Scotland at Bank of Scotland, said: “Scotland’s businesses continue to showcase real resilience, and are setting out plans for growth in the new year ahead.

“We’ll be right alongside them –up and down the country, so that they can make the most of new opportunities as they arise.”

Hann-Ju Ho, senior economist, Lloyds Commercial Banking, said: “It is great to see business confidence ending the year on a higher note, up ten points from the start of the year.

“The uplift in business confidence is driven by an 11 point increase in optimism in the wider economy, increasing to a four month high.

“Confidence changed most in the construction sector which saw a big boost in December, to the highest level this year.”

Paul Kempster, managing director for commercial banking coverage, Lloyds Business & Commercial, said: “To end the year stronger than where we started will be a boost for businesses as they gear up for the growth opportunities that they hope lie ahead in 2026.

“As we approach the peak sales period for retailers, it’s great to see their confidence rise as well as the considerable gains seen in construction.

“For all businesses regardless of sector, maximising cashflows, investment and a keen eye on margins will stand them in good stead as we head into 2026.”