BUSINESS confidence in Scotland fell two points in February to 35%, according to the latest Bank of Scotland Commercial Banking Business Barometer.
Scottish businesses reported lower confidence in their own business prospects month-on-month, down three points to 42%. Factoring in their optimism about the economy, down two points to 28%, that gives an overall confidence reading of 35%.
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals on UK economic trends, both regionally and nationally. This month’s survey collected responses between February 1 and 15 before various Covid restrictions were removed across UK countries.
A net 31% of businesses in Scotland expect to increase headcount over the next year, up seven points from last month.
Overall, UK business confidence edged up slightly in February, rising five points from January’s reading of 39% to 44% – its highest level since last September. Businesses remained positive about their future business outlook, rising four points month-on-month to 45%, while optimism about the economy as a whole also increased by five points to 43%. The net balance of companies planning to create new jobs increased by 9 points to 38%.
Every nation and region in the UK maintained a positive overall confidence reading in February. The North East (up 17 points to 57%), the South West (up nine points to 46%) and the West Midlands (up eight points to 47%) saw the largest increases in on a month-to-month basis, 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 decline, Scottish business confidence remains firmly in positive territory, and is another sign that businesses are welcoming a return to business as usually.
“Many in the hospitality and leisure sector in particular will be happy with the next stage of easing restrictions and are looking forward to what will hopefully be a busy summer season.
“Of course, some challenges remain. Rising prices, coupled with ongoing supply chain issues, will hamper many businesses, and we will support businesses as they navigate these headwinds and aim for growth.
The further easing of Covid restrictions in January had a positive impact across all sectors with strong increases in manufacturing (up 11 points to 54%) and construction (up 18 points to 51%), both reaching their highest level since the start of the pandemic. Retail confidence rose three points to 47%, another high since the onset of Covid. Services remained unchanged at 38%.
Paul Gordon, Managing Director for SMEs and Medium Enterprises, Lloyds Bank Commercial Banking, said: “The UK’s expected future growth is in positive territory following rising business confidence, business outlook and economic growth. economic optimism in February.
“Ten of the 12 regions saw growth in confidence, with a particularly pleasing rise in the North East which reversed its decline in January, indicating that businesses are looking to the future with renewed optimism.
“The construction and manufacturing sectors in the UK have seen the greatest benefit as Covid restrictions and supply challenges ease, while the retail sector has also seen a renewed confidence.”
“What is clear is that business confidence is on an upward trajectory and we remain with businesses as they seek to grow.”
Hann-Ju Ho, Lloyds Bank Commercial Banking Senior Economist, said: “It is extremely encouraging to see such an improvement in business confidence reaching its highest level since September, fueled by a trade outlook reaching its highest level since September. start of the pandemic.
“With hiring intentions also hitting their highest level since the end of the furlough scheme, it is hoped that the easing of supply bottlenecks will alleviate a number of challenges facing businesses and help support UK growth in 2022.”