BoS: Scottish business confidence takes a dip
Business confidence in Scotland fell by 16 points to 48% in September, according to the Bank of Scotland’s Business Barometer.
Companies in Scotland reported lower confidence in their own business prospects month-on-month, down 19 points at 47%. When taken alongside their optimism in the economy, which was also down 13 points to 49%, this gives a headline confidence reading of 48% (vs. 64% in August).
Looking ahead to the next six months, Scottish businesses identified their top target areas for growth as entering new markets (37%), investing in their team, for example through training (35%) and introducing new technology, for example by implementing AI, automation or digitalisation (30%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
Overall UK business confidence in September dipped slightly, to 47% down from August’s 50%.
Though there was a marginal increase in their own trading prospects (up two points month-on-month to 54%), firms’ confidence in the overall economy dropped nine points to 38%.
The joint-most confident regions in the UK were the West Midlands and London, both reporting overall confidence of 59%. Only Northern Ireland, Wales, London, the South West and North West reported an increase in overall confidence.
Projections for output were mixed across the sectors, with some showing significant changes from previous results. In construction, the sharp increase last month was largely counteracted by a drop in expectations in September, falling by 12 points to 46%.
Similarly, in manufacturing, trading prospects fell for a second month to 53%, although this figure is still stronger than the year-on-year figure. However, the falls in manufacturing & construction sectors were more than offset by a small rise in retail and a bigger rise in the dominant service sector.
Martyn Kendrick, Scotland director at Bank of Scotland Commercial Banking, said: “Despite this dip, which mirrors the broader UK trend, it’s great to see that Scotland remains one of the most optimistic regions in terms of its economic outlook.
“This optimism is well-deserved, given the array of events coming to Scotland this autumn, promising a boost for local SMEs. From Oban’s vibrant Royal National Mod to the Scottish International Storytelling Festival and St Andrews Golf Week where enthusiasts can tee off on the legendary Old Course, the season is brimming with opportunities. The fantastic news that Glasgow will host a version of the 2026 Commonwealth Games will bring even more global attention to our shores, too.
“Businesses have a golden opportunity to tap into this tourism boom. At Bank of Scotland, we’re eager to see how this temporary dip in confidence will rebound as businesses innovate and diversify to embrace the influx of visitors.”
Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “Although overall confidence fell this month, that fall was from a nine-year high and businesses remain positive about their own trading prospects. The joint-highest result this year could suggest that respondents still see a positive future for their own companies, which is also reflected in the largely unchanged employment figures.
“The more mixed picture for economic optimism points to some businesses maintaining a degree of caution. While we still expect economic expansion, it may occur at a slower rate than the first half of 2024.”
Paul Gordon, managing director for relationship management, Lloyds Bank Business & Commercial, said: “These results show that businesses are navigating a complex period, but it’s important to recognise that the underlying numbers remain strong.
“We continue to see robust confidence levels in the key sectors and regions, while firms show increasing confidence in themselves as evidenced by the joint-highest trading prospects results this year.
“At Lloyds Bank, we’re committed to supporting businesses and are confident that with our help, businesses can maintain a positive outlook as we move towards the final quarter of this year.”