Martyn Kendrick – Scotland director at Bank of Scotland Commercial Banking

The decline was driven by a ten-point drop in firms’ outlook for their own trading prospects, which now stands at 53%, though a four-point rise in general economic optimism helped to cushion the overall figure. Despite this modest cooling of sentiment, Scotland’s confidence level surpassed the UK-wide average of 44% for the first time this year.

Looking ahead to the next six months, Sco businesses identified their top target areas for growth as investing in their team. These include through training (41%), entering new markets (40%), and introducing new technology, such as AI or automation (38%).

Amanda Murphy, CEO for Lloyds Business and Commercial Banking, said: “Businesses told us their confidence fell as inflation pressures re-emerged, global uncertainty persisted and costs remained elevated. While sentiment declined, it remained above the long-term average, with nearly two-thirds expecting stronger output in the coming year.

“UK businesses are resilient and adept at deploying strategies to defend growth in uncertain conditions. Over the past month, we’ve seen them opt for flexibility wherever possible. They’re building contingency into their short and medium-term plans, rather than expecting a rapid return to normal. Protecting margins has become more important. That means tougher cost scrutiny and a greater focus on balancing growth with profitability.

“In this environment, as with other recent market disruptions, we continue to observe that sustainable success comes from discipline, resilience and clarity about what really drives long term value.”

The UK-wide 44% business confidence reading, a fall of 11 points in April, comes alongside a fall in firms’ confidence in their own trading – down six points to 54% – and their optimism in the wider economy dropped 17 points to 33%.

The East Midlands was the most confident UK nation or region in April at 53%, followed by London at 51% and the West Midlands at 49%.

Martyn Kendrick, Scotland director at Bank of Scotland Commercial Banking, said: “While business confidence has dipped this month, Scottish firms continue to invest in their future and thinking strategically about defending their growth, as they navigate global volatility.

“We’re here to support businesses across Scotland as they pursue these plans, whether that’s financing expansion, technology investment, or developing their workforce.”