Scottish business confidence drops by 50% in April
Business confidence in Scotland fell 43 points during April to -50%, according to the latest Business Barometer from Bank of Scotland Commercial Banking.
Companies in Scotland reported lower confidence in their business prospects month-on-month at -29%. When taken alongside their views of the economy overall, this gives a headline confidence reading of -50%.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
In an illustration of the impact of COVID-19 on Scotland’s businesses, the majority of firms reported a significant decrease in demand for their goods and services, with 72% seeing demand fall in April compared to 5% who saw it rise.
A quarter (25%) of Scottish businesses were operating below half of their capacity, compared to 43% UK wide, while 35% reported operating at above 50% of capacity. Almost a third (32%) weren’t operating at all.
With 70% of businesses reporting disruption to their supply chain during April, 19% expected the situation to improve within three months, while 8% expected it would take more than a year to return to normal levels.
Fraser Sime, regional director for Scotland at Bank of Scotland Commercial Banking, said: “Coronavirus has caused major disruption to businesses right across the UK. In particular, the impact is being felt by those operating in industries that are temporarily shut down, including hospitality and tourism – two sectors especially important to the Scottish economy.
“Bank of Scotland is committed to helping businesses across all sectors and we will work together to weather this storm. We have set aside £2bn of arrangement fee-free finance to help businesses directly affected by COVID-19.”
Across the UK, overall confidence fell 38 points to -32% as firms’ optimism in the economy and confidence in their own prospects dropped sharply month-on-month. Wales reported the lowest confidence at -52%.
In April, overall business confidence fell across all four sectors. Confidence in the manufacturing sector saw the sharpest decline, falling 46 percentage points to -35%, with the retail sector falling to -33%. The construction sector fell by 34 percentage points to -20%, while services fell 23 points to -22%.
Paul Gordon, managing director for SME and mid corporates, Lloyds Bank Commercial Banking, added: “April has shown the unprecedented impact of the shutdown for businesses across the UK with trading prospects and overall confidence free-falling across the regions. During this time it is important that businesses take steps to access the government schemes such as tax deferment, rates reductions, small business grants and the job retention scheme and the various finance options available to them so that they can survive through this crisis and be best placed to open their doors again in the months ahead.”
Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “The results in April demonstrate the full impact of the measures taken by the Government to shut down large parts of the economy to help contain the pandemic, with sentiment now matching the all-time low of December 2008. There are tentative signs that China’s economy is stabilising as it starts to ease lockdown measures, and that may serve as a template for the rest of the world.”
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