• Business confidence in Scotland rose eight points to 51% in July
• Firms’ optimism in their own trading prospects rose by one point to 45%, while optimism in the economy climbed 15 points to 57%
• Overall UK confidence rose nine points to 50%

Business confidence in Scotland rose eight points during July to 51%, according to the latest Business Barometer from Bank of Scotland.

Companies in Scotland reported higher confidence in their own business prospects month-on-month, up one point at 45%. When taken alongside their optimism in the economy, up 15 points to 57%, this gives a headline confidence reading of 51% (vs. 43% in June).

A net balance of 47% of businesses in the country also expect to increase staff levels over the next year, up four points on last month.

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 (54%), evolving their offering, for example by introducing new products or services (41%), and entering new markets (33%).

The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.

National picture

Overall UK business confidence climbed nine points in July to a net balance of 50% – the same as in May when confidence reached an eight-year high.

Businesses’ confidence in their own trading prospects rose 12 points to 56% – the highest reading since April 2017. Meanwhile, confidence in the economy climbed six points to 45%.

Wales and the East Midlands (both 62%) were the joint-most confident UK regions or nations in July, followed by the East of England (61%).

Sector insights

There was an improvement across all sector categories this month – most notably in retail which rose by 25 points to a post-pandemic high of 60%. There were also significant gains in manufacturing trading prospects, with the net balance increasing by 9 points to a two-year high. Services rose 10 points to 56%, while construction saw a more modest increase by 2 points to 44%.

Martyn Kendrick, Scotland director at Bank of Scotland Commercial Banking, said: “It’s fantastic to see Scottish business confidence rising again, and staying above the UK average for a second month in a row.

“With the summer in full swing, cities like Edinburgh are readying for a vibrant month ahead. The likes of pubs, shops, and tourist attractions are hoping to benefit from the Fringe and the Edinburgh International Festival, especially as last year saw 2.4 million tickets sold to visitors from more than 170 different countries.

“But this influx of tourists isn’t limited to the capital, with events like the Cowal Gathering in the Highlands, Fringe by the Sea in North Berwick, and the World Pipe Band Championships in Glasgow all playing a part in creating a real a buzz, and new opportunities, across the entire country. Wherever businesses are, and whatever their growth plans, we’ll remain by their side with our support for the ambitions.”

Paul Gordon, Managing Director for Relationship Management, Lloyds Bank Business & Commercial, said: “We’ve seen business confidence rebound in July, returning to the level we saw in May. Businesses may be feeling more resilient about their prospects which in the long term can help drive innovation and create jobs across the sectors.

“In retail, we’ve seen the highest level of confidence since the pandemic, which is a positive sign for a sector that has faced several challenges in recent years.

“We are committed to supporting UK businesses, whatever their confidence levels, providing the resources and guidance they need to thrive and grow.”

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “This month shows that businesses are feeling more confident, buoyed by their positive trading prospects and economic outlook. Retail-focused businesses were the main driving force behind the positive rise in trading prospects and these results tally with the improvement we have seen in consumer confidence.

“With the data suggesting that businesses may have taken a more cautious approach in June, next month will be one to watch to see if the renewed sense of optimism continues.”